Debt is as powerful a drug as alcohol and nicotine. In boom times Western consumers used it to enhance their lifestyles, companies borrowed to expand their businesses and investors employed debt to enhance their returns. For as long as the boom lasted, Mr Micawber’s famous injunction appeared to be wrong: when annual expenditure exceeded income, the result was happiness, not misery.
For a long time debt in the rich world has grown faster than incomes. As our special report this week spells out, it is not just government deficits that have swelled. In America private-sector debt alone rose from around 50% of GDP in 1950 to nearly 300% at its recent peak. The origins of the boom go even further back, reflecting huge changes in social attitudes. In the 19th century defaulting borrowers were sent to prison. The generation that lived through the Great Depression learned to scrimp and save. But the wider take-up of credit cards in the 1960s created a “buy now, pay later” society. Default became just a lifestyle choice. The reckless lender, rather than the imprudent debtor, was likely to get the blame….
Rich-world countries now face two sets of problems. The most pressing is how to pay off their debts. Many people who have cut back their credit-card spending and firms which have seen their credit lines slashed would be horrified to see how little the rich world’s overall burden has fallen. Much of the debt has merely moved from the private to the public sector as governments have correctly stepped in to support banks and save the economy from falling into depression. And in the future, even more money will have to be raised, because of governments’ lavish promises of pensions and health care for the retiring baby-boom generation.
We are now entering the phase in the news cycle when, after it probably too late to make a real difference, the MSM runs stories decrying the very issues it previously had either ignored or actually embraced. In the real world this is referred to as CYA.
“Much of the debt has merely moved from the private to the public sector as governments have correctly stepped in to support banks and save the economy from falling into depression.”
Well, that is debatable. The author states that government’s have “correctly” stepped in. We now know the author’s frame of reference, but we are no closer to knowing if what the governments did was correct. I don’t think the constitutional authority exists in the United States for what happened, but it doesn’t matter because we are no longer a nation of law, but are now a nation of men – by that, I mean that we are now (and have been for some time) under mob rule. The constitution has been devolved into a “living document” that can say what ever we want it to say with words meaning what ever we want them to mean; such that, in the end, it becomes meaningless and is only the figurehead that gives cover to the ruling class to impose their will over our freedoms. Presidential fiat and congressional “deeming” have rendered the Republic dead. We have an illusion of freedom for now, but it is only a matter of time before the mask of good intentions is removed and the brutality of raw power is revealed.
2, agreed. If there is any peaceful hope for the restoration of the Constitution the States need to call a constitutional convention now.