Friday, December 19, 2008

When you're maxed out

By Alan Caruba

When you’ve maxed out all your credit cards, is it really a good idea to keep on spending anyway? Will anyone lend you the money to keep spending?

I am the son of a Certified Public Accountant. My Father worked his way through NYU to earn his degree and was one of the youngest men to secure a CPA. He was the son of immigrants who came here because the old world they left was corrupt and devoid of opportunity.

You absorb lessons from your parents, often by osmosis. A CPA’s son learns to save all the receipts of his expenses in order to have proof of purchase. He learns to hire a good accountant to prepare his tax returns. And he learns not to spend more than he earns.

The United States of America, since the end of World War II, has forgotten the prudent lessons passed to it by earlier generations. Instead, in response to the Great Depression, brought on during the decade called the “Roaring Twenties”, it began to fashion a socialist system filled with “safety nets” such as Social Security, Medicare, and countless other means by which the federal government engaged in what is essentially a huge Ponzi scheme of taking money from gainfully employed people and giving it to others. Taxes rose. Savings diminished.

Social Security was inherently flawed. It assumed that individuals would not or could not be responsible to save for their elder years. It further assumed that most of the people receiving it would be dead by or shortly after reaching 65 years of age. That might have been true in the 1930s when it was conceived, but the average life expectancy today is 78 and many, thanks to improved medical care, live much longer.

Medicare was flawed because it interferes with the free market pricing of medical services. Adding the prescription element to it only deepened its indebtedness. Both systems will be unsustainable within a decade or so.

Does anyone really believe that financial service companies would not have provided affordable retirement plans to those wise enough to secure one? Does anyone believe that the healthcare industry would not have found ways to provide affordable services if Uncle Sam wasn’t picking up the tab?

Under capitalism, auto companies that do not negotiate well with unions or permit Congress to determine what kinds of models and options they must make would be allowed to fail. It could be argued that they deserve to fail.

In its early years, Henry Ford initiated a policy by which his company’s workers were paid more than his competition. His reasoning was that he wanted workers who could afford to drive Ford automobiles. The key word here is “competition.” It is the essence of capitalism, a mechanism that benefits those who can compete well.

Ford also toyed with the notion of using ethanol instead of gasoline to fuel his cars. Ethanol was too corrosive to engines. Gasoline was plentiful and affordable during an era when oil companies were not punished and limited by the government as to where they could explore and extract oil. No one opposed the useful and necessary role of government to protect consumers, but no one anticipated a Federal Register of regulations in excess of 76,000 pages!

Norman Thomas, a candidate for President of the U.S. Socialist Party, once said that, “The American people will never knowingly adopt Socialism. But, under the name of ‘liberalism’, they will adopt every fragment of the Socialist program, until one day America will be a socialist nation.”

That day has arrived and so has the bill.

The U.S. Treasury is tapped out. The nation functions based only on its ability to borrow a billion dollars or more every day.

The United States is just two States away from ratifying a new Constitutional Convention. The one we have has served us well since it was ratified on June 21, 1789. And following the Great Depression and World War Two, it has been systematically abandoned as its limitations on central government and the power it cedes to the States has been aggregated to the Federal government.

The American education system is a wholly owned Federal entity thanks to No Child Left Behind and its ownership of the Department of Education by the teacher’s unions.

Meanwhile, at least twenty States have spent themselves into a level of bankruptcy that will impose financial hardship on the next two unborn generations. This is how nations and empires implode and die.

This is why the federal government has plans to impose martial law. This is why soldiers, sailors, airmen, marines, and coast guardsman sworn to uphold the Constitution may well be ordered into the streets of America to protect those who have allowed corrupt elections and illegitimately elected politicians to replace the rule of law.

We are currently waiting to see if a comedian will be the next Senator from Minnesota. We are waiting to see if someone with a famous family name and no government experience will be the next Senator from New York.

The nation is preparing to swear into office a man whose birth certificate is sealed away from view by order of the Governor of Hawaii. His place of birth and right to serve under the U.S. Constitution is being contested in the courts and yet the full power of the presidency may be handed to him.

The Roman Empire is no more. The British Empire is no more. The Ottoman Empire was dismembered after World War I. French, German, and Japanese imperialist dreams came unraveled in the last century at the cost of millions of lives. The former Soviet Union’s ambitions still simmer. China is big enough to be an empire unto itself.

And the American Empire with its far-flung outposts manned by a volunteer military has spent itself into a very bad place. The entire world is holding its breath.


libertyforusa said...

Thanks for sharing your fathers story, our children and their offspring stories have been maxed out before they have a chance to even apply!

Guy said...

And, given the way the new administration is shaping up, I wonder how many of our people in the armed forces plan to re-enlist when their hitches are up? Not only are we about to be bankrupt, and spread out, but I'm guessing our military is about to evaporate before our eyes. I hope all the folks who voted for "change" are ready to be drafted ...

joe blowe said...

The idea that Ford increased salaries to allow his workers to purchase automobiles is a fallacy promoted by advocates of 'social justice' and 'fairness'.
He increased their salaries because the turnover in his factories was costing Ford too much. He was training his workers who would go to work elsewhere. It was a sound business decision as opposed to the current situation in which the unions are strangling the auto industries in the US.
It is about to get much worse, once the 'card check' disposition comes to pass.

Unknown said...

Agreed that for the most part it has developed into a fallacy for the Equality movements. But that does not change the facts that the increased wages of what were "the commoner" workforce radically changed the existing Rich/Poor classicism paradigm that had existed.

$360 for a basic vehicle and $5/day earnings meant, with careful savings, for the first time the "commoner" could afford the wealthy goods of the rich. Thus allowing a middle class to develop for the first time in America.

So it's not radically off the mark, but it's been badly twisted for others agendas.

Longstreet said...

I have yelled from atop my soapbox about the US going socialist until I am blue in the face... but to no avail. In fact, I get comments on "INSIGHT on Freedom" in which those who have little knowledge of history espouse their PRIDE that America is becoming a socialist nation.

I am concerned that we have raised a couple of generations of historically illiterate citizens who actually believe that socialism is a GOOD thing. When I point out that socialism is but a stepping stone to Communism, they don't even know what Communism is!!!

We are in critical times for this nation. Honestly, I do not believe America will survive as a free nation.

Socialism equates to/with slavery. But ignorance does not see it and ignorance is America's most abundant and most expensive product these days!

J. D. Longstreet