Every generation has an incentive to borrow money from the future to spend on itself. But, until ours, no generation of Americans has done it to the same extent. Why?
A huge reason is that earlier generations were insecure. They lived without modern medicine, without modern technology and without modern welfare states. They lived one illness, one drought and one recession away from catastrophe. They developed a moral abhorrence about things like excessive debt, which would further magnify their vulnerability.
Recently, life has become better and more secure. But the aversion to debt has diminished amid the progress. Credit card companies seduced people into borrowing more. Politicians found that they could buy votes with borrowed money. People became more comfortable with red ink….
David Brooks and Tom Friedman: always agendas in search of supportive facts.
[i]Today we are living in an era of indebtedness. Over the past several years, society has oscillated ever more wildly though three debt-fueled bubbles. First, there was the dot-com bubble. Then, in 2008, the mortgage-finance bubble. Now, we are living in the fiscal bubble[/i]
Dot-com bubble debt fueled? Uh, I thought it was fueled by rampant speculation and personal greed to make the next big kill,,,,,,a little like Facebook
Mortgage bubble debt fueled? Un, I thought it was fueled by Fannie & Freddie buying any and all paper from mortgage lenders who were giving mortgages to anyone with a pulse to collect the service fees….who cared if they were paid back.
Fiscal bubble debt fueled? Political America in Washington DC is not concerned about debt, just spending more. They simply have the Fed print whatever amount of money is needed. That money may become worthless unless there is value to back it up.
Life is more secure now? I don’t think so. The illusion of “security” is there, but one EMP event can make all that evaporate in a nanosecond. Some will not buy into the illusion.
In the end I think David is just schilling for Obama’s tax proposals.
I don’t think security, or a lack thereof, is the driving factor. It’s greed. It’s the notion which has been hyped by advertising agencies since the beginnings of the mass-media age (when radio came about): You need the latest gizmo, you deserve it, and you better get it right now.
People are unwilling to save for purchases, because that delays their pleasure. They are reluctant to live within their means if the result is they can’t have the latest iPhone, or an 80″ television, or an X-Box, or whatever.
And, there used to be a degree of shame associated with bankruptcy & failing to pay one’s debts/obligations. Now, people regularly laugh at how they’re walking away from home loans they can afford but don’t want to pay; they gloat at how they turned $50,000 worth of credit card debt on vacations and luxury items into $0 by just filing a few forms – and in 7 years they can do the same thing again.
I don’t know what it will take to re-instill a sense of personal accountability and thrift in Americans – but it’s certainly needed.
[blockquote]Political America in Washington DC is not concerned about debt, just spending more.[/blockquote]
I don’t really agree. I don’t think they care about either of those things. I think they are only interested in money and power. I think most of them want to give what they need to give to the people who can make them rich and powerful. There are a few honest souls left in Washington, but not many. In the era of Super Pacs, money talkes loudly and carries a big stick.