Current analysis of economic conditions in the United States centers on the need for businesses to obtain financing. Tight credit is supposedly the root of our current economic recession. America, so we are told, runs on credit. At the same time, we are told that consumer debt is a serious threat to our economic health and should be avoided. Credit card debt, so we hear, is a huge problem for most American households.
Can anyone see the conflict in this message?
It’s okay for General Motors or Chrysler or AIG or any other company to amass huge amounts of debt. After all, debt – dressed up as financing – is essential to the life of American business. It’s okay for a business to incur debt, but not okay for an individual? It’s okay for the federal government to borrow billions from China, yet not okay for the consumer to borrow thousands from MasterCard?
If American consumers can’t borrow their way out of debt, chances are, the federal government can’t either.