You Cannot Borrow Your Way out of Debt; Tell that to Obama’s Economic Team

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This nation is facing its worst financial crisis since the Great Depression of 1929. If things are not soon brought under control, we can expect widespread unemployment and rapidly declining real wages beginning by the summer of 2009. But the economic geniuses who manage this country's greedy capitalist system are responding in a manner which puzzles me.

The Bush administration pushed through Congress an $800 billion bailout plan primarily aimed at saving mega-billion dollar banks and super-giant insurance companies. Now, the incoming administration of President Barack Obama is floating the idea of another $700 billion to $800 billion bailout plan targeted more so toward the middle class than to the already super-rich.

While the Obama approach appears more fair and egalitarian, it still contains a fundamental flaw. I summarize what I see as the flaw by quoting something a wise old man told me when I was a young, upstart reporter. In response to a question, he said, "Son, you can't borrow your way out of debt."


By pumping more and more debt into the society - be it going to the super rich or the middle class - are we not doing any thing more than providing temporary relief while sinking deeper and deeper into debt? Thus, will not the problem do no more than go away for a while just to return more vicious and destructive than it was before. As I understood it, the problem which set this whole crisis in motion was debts which were not being repaid. Now, we aim to solve the problem by going even deeper into debt.

This temporary relief will either be achieved by simply printing more money and thus lessening the value of the dollar or by borrowing from the Chinese. Before this crisis is over, we will easily owe the communist rulers of China well over $1 trillion. They will hold more U.S. treasury notes than any other country in the world. The Chinese will be our bankers.

Pushing aside the loss of control over our own economy that the above fact implies, American tax payers must ask the question, "Can we actually borrow our way out of debt."


Might not it be a better idea to allow some of these mega-companies to simply go out of business or declare bankruptcy and give better organized, more productive and more intelligent firms and individuals the opportunity to emerge in their place. This will indeed lead to the restructuring of the economy. A lot of that money now trapped at the top of society in the hands of the few would be forced downward and outward into the hands of a far greater number of people and businesses.

Selfishly, I have always felt that if a few of the media giants were to go out of business, small media firms like mine could grow faster and provide America with a wider range of accurate and objective information.

Regardless, I remain firmly convinced that pumping billions of taxpayer dollars into the hands of the already super-rich in order to save them is a mistake. Let them fail and allow more competitive firms to emerge in their place. Not only is it a mistake to go deeper and deeper into debt in order to solve a debt problem, it is even more stupid to give that borrowed money to the very firms which caused the crisis in the first place.


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