I am baffled by the politics of money. Why is a balanced budget so difficult for congress to grasp? Yes, I believe in compassion and security but we’re all in trouble if we run the great american bus into the ditch! And it seems like that’s where we’re heading… The deficit is just growing larger, debt is piling up, the dollar is on the edge of a nasty cliff and we keep spending MORE! The country is in a hole and if we don’t stop digging we won’t just hit China- China will hit us. (I wonder how difficult those Chinese Rosetta Stone lessons are?)

At my house we faced a similar crises a few years ago: spending more than we were making, piling up debt until we could only pay interest with dollars that were worth less and less. What did we do? We stopped spending and started hustling to get out of the hole. It was painful and depressing. Non essential health care was not an option (braces can wait). Eating out was over and vacations were more creative and less expensive. No more fancy clothes or gadgets. All our extra money went to pay down that evil debt and after a frantic couple of years we began to see some light at the end of the tunnel. What seemed excruciating at the time now feels like victory and we have some breathing room to actually work on a sane, balanced budget! I know that’s a small-scale example in comparison but it’s still just math- move the decimal point a few times & it’s the same old story.

The real budget fight in Washington is over what to cut spending on… but my fear is that the fight will go on- right into the ditch. If that happens, spending cuts won’t matter because the value of our currency will already be flushed down the toilet. Think that doesn’t matter? Imagine this scenario: gas goes to $5 per gallon (quite probable regardless of our fiscal situation) but what if $5 isn’t worth FIVE DOLLARS globally anymore (take a trip to Europe and you’ll feel the trend in your right butt cheek even now).  So, as the dollar declines globally, $5 becomes more like $3 or $1 or worse… and that $5 per gallon will quickly turn into a real $10 to $15 to even $25. The borrower is servant to the lender and lenders are lenient for only so long. Take China for example- once our purchasing power is diluted by a debt soaked dollar, our leverage is gone. America isn’t the only customer in the world for fake plastic trees. And once our purchasing power is gone the Chinese debts will be due and that will be a huge domino in our pattern of failure that will topple even the little things we take for granted. Or, maybe I just really can’t grasp the situation here?

That’s it! Maybe I’m just too dumb to understand that America is too big to fail. Does the rest of the world understand that? I hope so… but I doubt it. I don’t think many Arabs would lose sleep over our financial crises.  The orient would just protect their assets (as they should) and India would keep on trucking. Africa, as a whole, wouldn’t notice much and Europe would hold the fort while the euro became the preferred currency for oil. Sure, they’d lose some on their investments in the US but I doubt there would be many people jumping off foreign bridges. Using the past as a predictor, America is definitely not too big to fail… 1929 is a great reminder of that fact. 1929 was not that long ago.

I am simple minded in a way and I am baffled by the politics of money in the USA, but I did learn about math in school and I understand what happens when debt over-runs income for a prolonged period of time. If we don’t stop spending and start paying this debt down (irritating for sure) then evil days are immanent. I might have to start thinking about moving to Mexico again.

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