A LESSON FROM SNOWBALLS

Any kid who has ever played in the snow knows that you can take a small snowball and turn it loose on top of a hill and watch it grow in size as it goes down the hill. One of the lessons to be learned is, small actions can have huge consequences. The same principal also applies to economics. Over the past few days we have had politicians talking about the stimulus package that would give many Americans around $600.00 each to spend and supposedly stimulate the economy. Before we start to sharpen our pencils to endorse those checks we need to remember what our system is supposed to be.

In my opinion, many Americans have forgotten how our economic system is supposed to work. Have we forgotten that our system of economics is Capitalism? Capitalism is the best system of economics that has ever been devised by mankind. It works great until the government starts interfering with the system.

There is an old saying that says, “You cannot spend yourself rich”. I believe that statement, but if there were ever a people who wanted to attempt to disprove that statement it is we Americans. We have become a people who don’t worry about going into debt. We spend money like there's no tomorrow. We borrow money like there's no tomorrow. And we save nothing for a rainy day. Our national savings rate is a disgrace at only 0.5% of national income. American corporations are also drowning in debt, in 1975 corporate debt represented 12.9% of GDP; today that figure is 53.1%, making U.S. corporations the most indebted they have ever been.

Our national debt is currently 9 trillion dollars and that doesn't take into account social security, Medicare, government pensions coming due, or any other domestic obligations the government is responsible for. When all of these obligations are added up our government will owe 55 trillion dollars.