
Premature Self-adulation
I was debating a friend of mine a while back about the current financial problems. He was arguing against my ‘hands off’ policy, saying that in times of economic downturn the government borrowing and spending money is a good thing. Operating in debt will help jump start the economy, and the money can be paid back after we’re experiencing growth again.
At the time I didn’t have an answer, but I finally thought of a response.
Lets say we’re talking about a person who’s just lost their job and has some money put in the bank. Now, if this person opens up a line of credit he can continue his usual lifestyle until he can find a new source of income. This seems like a sound financial plan, except it ignores a property of human behavior, in that we don’t plan well for the future. If you have a credit card, chances are this person could get caught up in purchasing unnecessary luxuries which he’s not going to be able to pay back if he doesn’t find another well-paying job soon.
Similarly, operating the federal budget at a $10 trillion deficit is a sure way to screw ourselves in the future. Who knows if and when the economy will pick back up? Especially since the current problems are caused in part by bad credit practices in the first place.
What Washington politicians are offering is basically more of the same. They want to fix problems caused by bad credit with more bad credit. These giant investment banks which are going under because they thought they could take advantage of people who wouldn’t be able to pay their credit card bills are now being saved by congress and the Federal reserve. And how does the Fed bail them out? By borrowing and printing money, which causes inflation and devalues the dollar.
The Fed is opening a line of credit through the American dollar and isn’t providing a deadline in which it’ll pay us back. Instead, congress is giving the IRS permission to survey every credit card transaction Americans make, and expects the IRS to be able to solve our problems. As far as I’m aware, the IRS has created more problems than it has solved. While I do like new laws that protect consumers from being frauded by creditors, the problem isn’t going to be solved by giving the IRS more power and fingerprinting federal employees (yep, that’s in the new “Housing” Bill too).
At some point, we’re going to have to realize that more protectionism and spending isn’t going to fix problems caused by bad credit. Consumers need to realize that there’s no such thing as free credit. Investing in yourself (or in your future self, as it were) is risky just like investing in the stock market. If a market fails, or if you can’t pay their credit card bills, the government taking care of your investments is only going to create weaker markets, untrustworthy consumers and a weak economy.
A poor economy will only be fixed in the long term by tightening your belt, cutting out luxuries, saving money, and making safe investment decisions. The beauty of the free market is that while companies may go under from time to time, that will ultimately strengthen the economy because it is the weak ones that are going under.
You wouldn’t buy stock in a company that’s about to declare bankrupcy, so why should the government weaken the dollar in order to do the same?

By "nationalism" I mean first of all the habit of assuming that human beings can be classified like insects and that whole blocks of millions or tens of millions of people can be confidently labelled "good" or "bad." But secondly -- and this is much more important -- I mean the habit of identifying oneself with a single nation or other unit, placing it beyond good and evil and recognizing no other duty than that of advancing its interests.
Nationalism is not to be confused with patriotism. Both words are normally used in so vague a way that any definition is liable to be challenged, but one must draw a distinction between them, since two different and even opposing ideas are involved.
By "patriotism" I mean devotion to a particular place and a particular way of life, which one believes to be the best in the world but has no wish to force on other people. Patriotism is of its nature defensive, both militarily and culturally. Nationalism, on the other hand, is inseperable from the desire for power. The abiding purpose of every nationalist is to secure more power and more prestige, not for himself but for the nation or other unit in which he has chosen to sink his own individuality.
France, where pacifism and internationalism were strongest, became a classic example of how much it can matter.
During the First World War, France fought on against the German invaders for four long years, despite having more of its soldiers killed than all the American soldiers killed in all the wars in the history of the United States, put together.
But during the Second World War, France collapsed after just six weeks of fighting and surrendered to Nazi Germany. At the bitter moment of defeat the head of the French teachers' union was told, "You are partially responsible for the defeat."
