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Of Credit Card Debt and Economic Stimulus

Posted by GayPatriotWest at 6:25 pm - January 18, 2009.
Filed under: Economy,Random Thoughts

Should the Democrats’ “Titanic Stimulus” pass (as I expect it will), expect a short-term boost to the economy.

But, I fear the long-term consequences. It will not lead to economic recovery, only prolong our day of fiscal reckoning.

Here’s why. Imagine, if you will, an individual who has all but maxed out his credit cards. As he pays off the minimum balance due each month, he can barely afford anything but the bare necessities. He’s been peitioning the credit card companies to increase his credit line, but to no avail. Finally, one day, with a change in the management at those companies, they agree to his request.

With a new higher line of credit, he can start spending money again, so we see an increase in his “economic activity.” But, as he spends more, he adds to the debt he has already accumulated. He’s going to have to pay it off sometime. And when he does economic activity will slow down.

So, let’s hope our elected officials think about that as they consider a massive increase in the federal credit line at a moment when the federal government is already saddled with trillions of dollars in debt.

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9 Comments

  1. Titanic is certainly the right name for this: big, grandiose, and destined to sink.

    The credit card analogy is pretty close except for one thing: all we’re doing is making minimum payments. The bills will still be coming when we’re all gone.

    If runaway spending guaranteed boom times then we’re should be booming (and Californians should be having an orgy of economic growth).

    I guess politicians must be seen to be Doing Something – even when the best thing to do may be nothing.

    Comment by SoCalRobert — January 18, 2009 @ 7:36 pm - January 18, 2009

  2. What a wonderful analogy! Unfortunately, the liberals have no idea what you are talking about.

    Comment by dsgawrsh — January 18, 2009 @ 8:19 pm - January 18, 2009

  3. I’m amazed that liberals can spend years whining about Bush’s spending, but when Comrade Obama comes along and promisses to spend even more, he’s the best thing since the invention of Oxygen. But then I can see how Oxygen thieves could dig that.

    Comment by ThatGayConservative — January 19, 2009 @ 5:50 am - January 19, 2009

  4. Are you really amazed, TGC? Apart from maybe Pat is there even one left-wing troll on this board who does not subscribe the dictum that “Anything is okay as long as my side does it?”

    Comment by V the K — January 19, 2009 @ 9:45 am - January 19, 2009

  5. To take your analogy one step further GPW, when the man gets to a point where he can no longer pay the NEW minimum balance, the credit card company raises the interest rates on those people paying their minimum balances. Thus all customers…Americans…end up paying thru the nose for the short term, feel good fix. It’s called run away inflation, and trust me the poor, minorities, women and children will be hurt most.

    Comment by Gene in Pennsylvania — January 19, 2009 @ 1:51 pm - January 19, 2009

  6. Wait, have Republicans finally figured out that deficits are bad? If only they had figured that out eight years ago before Bush and his Republican Congress ran up an $11 trillion tab.

    Comment by Houndentenor — January 20, 2009 @ 10:29 am - January 20, 2009

  7. […] The Democrats must be crazy, or blind to fiscal reality. I agree we need to do something to improve our economy. Real deregulation and budget cuts might help. While a vast increase in spending may provide a short-term boost to the economy, in the long run, it will only exacerbate our economic pro…. […]

    Pingback by GayPatriot » The Democrats Must be Crazy — January 23, 2009 @ 1:26 pm - January 23, 2009

  8. […] over a week ago, that quesiton was a foolish one.  I was convinced a near-trillion dollar stimulus would pass.  But, some things I read on the web the weekend cause […]

    Pingback by GayPatriot » Could Congress Reject the Stimulus? — January 26, 2009 @ 6:45 pm - January 26, 2009

  9. […] amounts of debt.  It’s like a guy who admitting it’s a problem that he’s maxed out his credit cards deciding to go on a spending […]

    Pingback by GayPatriot » The “Stimulus:”A Return to the Politics of the PastSpending Money That Doesn’t Exist — February 6, 2009 @ 6:06 pm - February 6, 2009

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