It's the Debt

 IT'S THE DEBT

We speak of debt as something we don't want.  It can cause problems; one's life can be seriously disrupted by debt; it controls our life; we have to make money to pay money for the money we borrow to buy things.  All very simple really.

But if you put it into a larger context such as the debt existing in the United States which according to those in the know is multiple trillions, the effects can be rather startling.  If you look at debt as an economic concept rather than a personal matter, one may gain some clarity as to its effect  on our personal lives.

When the bank loans you $50,000 to buy a new car, the bank has created $50,000 in money that did not exist before they loaned that money to you.  The bank has created $50,000.  If the household debt in the United States is $18,400,000,000,000 which has been suggested, there has been $18,400,000,000,000 money created by lending institutions that did not exist prior to the lending transactions.  

That $18,400,000,000,000 exists as money.  Somebody has it.  You borrowed the money to buy something and paid someone $18,400,000,000,000 for the items you purchased.  That amount of money exists somewhere and is controlled by somebody.  That money was simply created by us, the borrowers.  Those who now have that $18,400,000,000,000 are indeed rich.  We, the borrowers, have made many people very rich indeed.

If all this money were to be repaid tomorrow, the country would have $18,400,000,000,000 less than it did before.  That money would simply disappear; it would be gone; poof!  Could our society, our country, continue to operate if suddenly $18,400,000,000,000 disappeared.  Would you be able to buy anything?  Would the companies and people that make these things be able to sell anything?  Would it be 1929 again?

Why doesn't the national debt get reduced?  Every generation of politician says their goal is to reduce the national debt.  It never gets reduced; it always increases.  The greater the national debt the greater the amount of money in the economy.  With less debt, with less money, people will complain, people will go broke, people will not be able to buy stuff.  Our politicians do not want this; they will be blamed and rightly so.  They would be responsible for less money rattling around in the economy available to you and me to buy stuff that we don't need and could easily do without.

So you will have to make up your mind that even if debt affects you adversely personally, its effect on us as a people and our country may be entirely something different.

Richard E H Phelps II

Mingo