Daily Archives: October 9, 2008

We Only Have a Few Options…

All this talk about bailouts and blooming federal government deficits is enough to make you wish that you could click your heels and go back to a simpler, less chaotic time.  What really bothers me is that I worry we are only delaying the real crash. Sure, the stock market could soon drop below 8000. But the bigger point is that we eventually have to live within our means and start to pay back what we owe the world.

I believe the government basically has a few options to pay back its dept.

1.) Increase taxes and fees. This is likely to happen, especially for anyone with money or those who have done the right thing by saving money over the past 20 years instead of live like a Saudi prince.

2.) Refuse to pay it back and ask, “Whose going to make us?”

3.) Take over another country and use their resources to pay off our debt. This isn’t likely to happen. This kind of exploitation stopped in the 1800s or did it?

4.) Crank up the printing presses and pay our debts back with a worthless dollar.

None of those options looks really appealing. We could always cut budgets and try to reduce our debt. But that would be responsible. And who likes to be responsible in the federal government? Republicans used to be for less spending. Not any more. Democrats have always liked to spend like a teenager with his/her first credit card. At least they want to pay for the spending by getting daddy (all the rich people) to pay for it. Of course, this has a negative effect. It causes people with money to buy less, live in other places and generally take money out of our economy.

I have a feeling we will choose a bit of option 1 and 4. That means we are likely to see more downward pressure on the dollar. This is basically a tax on wealth, which means those who have done the right thing will pay with their savings become almost worthless. It is enough to make us all want to march on Washington and demand someone to just, “Fix It.”