Posted by
Stefano on Sunday, March 22, 2009 1:17:53 AM
Have you ever had a friend who had no concept of the value of money? I’ve had such friends over the years. They’ve had varying degrees of this malady. Some are simply devoid of the ability to say no to spending. Some must have the latest car or electronic device as soon as it first appears in the showroom. A very few simply cannot abide the presence of money in their pockets. It seems to just disappear as soon as it comes into their possession. Credit cards or the ability to borrow money easily is death to the financial health of these kinds of people. In short order, these types will run a credit line as far as it will go. If infinity were possible, that is the amount that they would borrow. Never give this type of person, or anyone for that matter, access to a credit line with your name on it. Tragically, I have given you that warning knowing that it is too late.
You have already granted someone the ability to borrow money in your name. You might as well have given this person your MasterCard and your pin number. The grant you have given is open ended, that is, there is absolutely no limit whatsoever to the amount of money that can be borrowed, and you are personally on the hook for whatever is borrowed. That someone can also legally borrow money in your name in cash and give it to someone else who lives around the corner from you. If that isn’t bad enough news, get this: The one who has this borrowing power in your name is a spend thrift. He’s been borrowing money for years, and hasn’t paid his debt down to zero in more than a hundred years. His budget process is so goofy that he actually plans every year to spend far more than his income brings in. He just makes up the difference by borrowing more and more, and each time he borrows, he puts your name on the note. He promises that you will pay the principle and the interest. Have you ever heard of the miracle of compound interest? Well, the debt you are responsible for is compounding against your net worth at a breath taking rate. When will you stop sitting on your hands, wake up and do something to stop this fiend from stealing your financial future?
The person we are talking about here is your uncle, the one we all affectionately call Uncle Sam. Sam, under the guidance of the President and the Congress, has been on a blockbuster spending spree for the last 45 years. He has taken your no limit credit card to the cleaners for a total national debt of more than $11,000,000,000,000.00. By September 30th the debt will be $12,700,000,000,000.00. With the President’s current budget proposal, in four years the debt will be $16,000,000,000,000.00. If you add contingent liabilities like Social Security, off budget borrowing, Medicare, and government pensions the total would be increased by an astounding factor of 4 or 5 for a total of 45 to 55 trillion dollars. Will we ever be able to pay off this astounding level of debt? When will we scream “STOP!” to Uncle Sam?
Read this recent Forbes article:
The United States Of Ponzi
by: Nouriel Roubini