From Riches to Rags?

Feds & Government Stick Fingers in Dike,

by: bonnie alba | published: 07 18, 2008

In 2004, Gerald Swanson, Professor of economics at the University of Arizona authored "America the Broke." He wrote: "our political leaders, Republicans and Democrats alike, have abandoned all pretense of fiscal responsibility. Spending is out of control, further ballooning the highest national debt in the history of the world. ...(our) current plight could touch off a world financial crisis and another Great Depression."

Four years later -- the looming "now" crises -- housing, banks, oil and natural gas -- you name it, we're there. In my January article "Feds & Government Stick Fingers in Dike," I lamented, "The dike is developing more holes than there are fingers and toes to plug them. The whole dike through neglect is now threatening to burst and bring us into America's Last Great Depression."

For decades the Federal Government and the Federal Reserve (supposedly separate entities) trumpeted a "strong" economy while they continued to band aid over the threatening leaks in the dike.

Our economy has continued in a downward spiral driven by underlying forces which threaten American prosperity, liberty and freedom. Citizens are only now waking up to the damage done by our government and ourselves. Affected by higher prices -- for everything we buy -- we either are coping or whining.

Big Bro is bailing out Fannie and Freddie, taking over IndyMac with long lines of clients waiting to collect their money. As in any major election year, the Congress refuses to tackle any major issue or crisis. This is beyond cowardly.

The Federal Reserve is only now publicly hinting that there's a wee bit of a problem with America's "strong" economy. They still deny there's any "real" recession or inflation. While they merrily print billions of worthless paper dollars, global confidence in the U.S. dollar as the accepted world currency is eroding.

We are no longer a creditor nation. We are a Debtor nation in hock for trillions plus all the entitlements (more crises headed our way) debt looming in the next few decades. Add that we keep sending billions of taxpayer money (foreign aid) to other countries, not cutting back at all.

In recent weeks, various polls have gauged the peoples' confidence in government, specifically Congress and President Bush's administration. Congress: 9 to 18 percent; President Bush: 27 - 37 percent. Yet Congress has stymied any effort to do what is right for the nation, as a whole.

Members of 'our' Congress, for better or worse, are notorious for their lack of economic knowledge and frivolous spending. They can't seem to keep track of how much they spend or gauge the costs over and against revenues; short term or long term.

Like a wide-open water spigot -- they never turn it off and it just keeps giving and giving. But like citizens who have maxed out their credit cards and can no longer make the payments find out, the spigot does eventually dry up.

Congress is responsible, but takes no responsibility for their past actions. When Rep. Ron Paul (TX) questioned Treasury Secretary Paulson before the Banking Committee, Secy. Paulson gave the usual long-winded positive spin, policy-making rhetoric, which meant absolutely nothing.

It is also worth recognizing citizens' role and responsibility in allowing and falling into the trap that our government has promoted. We have believed the lie so we can have our cake and eat it too:

1) Debt is Good. For 50 years, how many of us believed that being slaves to debt was a good thing?
2) Own your home. How many of us believed and bought the lie that a mortgage loan, no matter how large and unpayable, was the way to the American Dream?
3) Government can Fix All Things. How many of us have fallen for that lie over the last 50+ years?

This path is leading us not from rags to riches, but from riches to rags.

We would do well to remember the words of Thomas Jefferson in his 1801 First Inaugural Address to the nation: "With all these blessings, what more is necessary to make us a happy and prosperous people? Still one thing more, fellow citizens---a wise and frugal government...which shall leave them (citizens) otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned...."

Americans long ago abandoned what Thomas Jefferson said about economy, "I place economy among the first and most important virtues, and public debt as the greatest of dangers."

Wise and Frugal? Virtuous? I believe this wisdom has been lost, but is not irretrievable.

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