Saturday 21 Jul 2018 | 21:42 | SYDNEY
Saturday 21 Jul 2018 | 21:42 | SYDNEY

Reader riposte: Consumer debt and US power


Sam Roggeveen


30 October 2008 08:32

Aplologies to Pete Speer for neglecting to publish this earlier, his reply to my post about the geopolitical implications of consumer debt:

What we have seen is the culmination of the consumption gratification society, where the household sector was lured by government (the political sector) to shuck savings and go up to their scrota and past with debt. 

The spending masked overspending by the political sector, both directly and in setting high liabilities in direct debt and accrued obligations which the next generation would be expected  -- somehow -- to pay. We are talking in excess of $54 trillion, with current annual deficits which may exceed $1 trillion over each of the next several years.

It also excused the corporate sector from investing in the US and creating 'value added' jobs which acted as a true economic multiplier. They were invited to invest huge amounts overseas in cheap labor countries to hold prices down at retail here and enable these so called export industries to sell overseas as well. Unfortunately, the bacon was not brought home, but reinvested overseas. Some people got rich, but the economy no longer had the 20th century economic multiplier we called Value Added by Manufacturing. We now are told it is 'Value Created by Ideas' which will carry the day. Ideas are cheaply transportable and the period of economic rents very short.

The citizens are starting to see the Big Con. A prominent gambler once said that when you enter the poker game, you look around the table to see who the sucker is. If you can't see him, it is you. The game here is the future of this republic and right now we are falling in line with the earlier French republics and the one in Weimar. 

Benjamin Franklin once said that the founders were constructing a republic -- if we could keep it. The federal government will not save us from ourselves. Unless watched, they will save it for themselves first. It is up to us to keep the republic, the functioning families, the economic opportunity, the interclass mobility. If not, hello Socialism, income redistribution and more power to the central government, whose wards we are becoming. Hello, suckers.

Nothing is free, certainly not freedom. How do we keep it? Have we so drugged our people with legal pleasures of spending their future income that they can not recover? The political sector wants to cover their collective fannies by keeping us in a stupor they induced for the benefit of their own longevity. They literally throw money at possible solutions that they have not worked out in a fit of self protection. Mr Bernanke's acquiescence to the Democratic second stimulus package is a case on point. They provide chum for the citizen fish while billions are wasted in the bailout.

We are in a domestic war for the future of the republic and not one leader acknowledges that there must be sacrifice on our part to return to a saving and investing society. Anybody with minimal sense knows that the free lunch must now be paid for. In the fable of the ant and the grasshopper we must all become ants.