Last week I wrote that I was about to embark on a quest to educate myself about the current economic situation so that I would be able to at least comprehend what a trillion dollar stimulus means, and what an educated response to the economy in general should be. Now, admittedly that goal is ambitious--if world-class economists can't agree on the appropriate approach, what makes me think that I can hone in on an opinion? Nevertheless, as promised, I started reading up.
Well, several days later I haven't gotten that far. Not because I think it's boring (although I will confess that my latest knitting binge has kept me otherwise occupied), but because there is so much information to process--so much to learn--especially for an economic novice like myself.
So I don't have much yet to share, except this--you might have noticed on the sidebar that I have added, just for today, the National Debt ticker on the above left. My reading, as you might be able to tell, started with budget deficits and the federal debt, hence the rather alarming clock.
Here are some of my initial comments:
1. I had a physical reaction when I visited the debt clock for the first time yesterday. A sort of rising panic in my stomach. Seeing all of those zeroes, and the millions adding up so quickly, made me want to check my own bank account! Which leads me to say that..
2. ...it is so easy to hear the words "billion" and "trillion" and relegate them to some abstract concept of monetary value. But seeing the numbers scroll by like that made it seem a little more real to me. Not completely real, but a little more real.
3. The basic fundamental truth behind the federal debt is that the government is spending a lot more than it is drawing into it's General Fund (funded by our income and corporate tax dollars). And these numbers don't even include the stimulus package currently being debated in Congress!
4. The government borrows money from the Social Security and Medicare trust funds to help offset this debt, but that money only covers about half, which still leaves the country about $5 Trillion in the hole...
5. ...and where does the rest come from to fill in the gap? Foreign countries. Like China, for instance, and the United Arab Emirates. And they are charging interest. Let's hope they don't come calling to collect anytime soon!
I read recently that people tend to dismiss things they don't understand. Well, I certainly don't understand the complexities of our modern global economy. But what I do understand is that spending more than you make year after year leads to one inevitable end: bankruptcy. And I have no idea what bankruptcy would do to our nation, but I can't imagine that it would be pretty.
I hope I haven't frightened you all into never returning. I promise I'll take the clock down tonight (mainly because I can't stand watching it for too long). But I also promise that I will keep routinely writing on this issue of the economy, because it is too important to ignore. And I can't in good conscience write day in and out about the home economy and entrepreneurialism, or even spending money on swing-arm sconces, without paying mind to some of these bigger issues.
note: Smarty Pants posts are my routine reflections on current events. My hope is that we will all become smarty pants.
For Previous Smarty Pants posts on the economy, read below:
I say we do let it all fall apart...let business fail...that is what happens. We came from nothing...we can do it again...I think we are putting of the inevitable!!
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