An Essay on the Website of
the Red Dirt Writers Society

The Financial Ruin of a Nation
by Ryan McKinley (Apr 2011)

My father offered me some advice on the eve before my wedding: “There will be a time for you to have a nice car, a large television and new furniture. Now that you’re married, you’ll be spending time with couples that have these things, but as you see what they have, don’t forget that they spent years acquiring them. If you try to obtain these items too quickly, you’ll be crushed with debt too early in life.” My father saw the change that was taking place in our society regarding financial attitudes. His father, a Great Depression and World War Two survivor, came from an era where people did not use credit. If they wanted anything, they saved; if they bought a house, they paid it off as quickly as possible.  They knew the joy of financial independence. A generation later, credit card balances are at an all time high while personal savings rates are at an all time low. Casual attitudes towards debt have enslaved our population, and that attitude is not just a problem for the masses; it has seeped into our national leadership. Despite the hard work and dedication of our ancestors, our nation’s financial woes stand to negate every great accomplishment of these United States of America.

Credit has always been a requirement for running a business, but personal credit debt was not always common. In fact, the creation of credit cards was not accompanied by ease of access. Income and collateral were considered just as important as payment history, so not everyone that wanted a credit card was in the position to obtain one. In the early 1990’s banks lowered their standards for new credit card applications and began to trade collateral for “future collateral”. Instead of showing earnings, one only had to show potential earnings, and who embodies the hope of increased earning capacity? College students! Not ones to exhibit the principle of restraint these students’ dorms, once parlors of ramen noodles and three-ring binders quickly morphed into technological wonders filled with stereos, televisions, and fast-food containers—all financed on the backs of future earnings.

This “get it quick” attitude rolled over to the housing market. “Why limit someone to a small home when they may someday be able to afford a larger one?” the banks asked. “Let’s start making money off them now!” The banks began issuing interest-only loans to anyone with a signature. Collateral did not matter, only one’s desire to take on the burden of a loan that would never be paid off. The so-called owner was happy, because they had the home they wanted; the bank was happy because they were making interest off a very large loan that otherwise would not have existed. “Who is not going to pay their home loan each month?” The housing crash of 2008 revealed the false nature of this practice.

Easy access to credit has not made us more responsible with our finances. Americans have used credit as a genie in the bottle, granting their every wish, but the genie has become a drug dealer and the addiction is now out of control. Credit card debt has lead to bankruptcy and foreclosure rates that are sky-rocketing, all while future job prospects of college graduates are as dim as ever. The long bet made by banks and consumers has failed to pay off. The false religion of material wealth has revealed itself to be a demon bent on possessing us completely.

While many reject the religion of hard work and saving, there seems to be a revival in our midst capable of exorcising this demon of excessive spending. The new prophets are Dave Ramsey and Suze Orman. Americans are tuning in three hours a day to hear the simple gospel of fiscal responsibility and the freedom and truth behind living within our means. Are these radio hosts sharing some esoteric knowledge? No, they are simply passing along the message that past generations used to guide their financial lives—“Don’t spend more than you make.”

Our repentance may be too late. We now find ourselves ruled by our doppelgangers voted to the seats of power in the Senate and Congress. While American people are slowly hearing the message about personal responsibility, our leaders seem to be stuck in the 1990’s by leveraging their out-of-control spending against the potential of our future. The Republican and Democrat parties do not see the coral reefs of destruction ahead. They have reached a federal spending limit and they are considering raising the debt ceiling again! We have hit bottom, and rather than admit that our nation’s ship is sinking and steer her into port for repair, they are bickering to preserve or unseat President Obama as captain in 2012. Unwilling to remove focus from their short-sighted concerns, they propose ridiculous solutions to our money woes to placate their voting base. Raise taxes to pay for more funding? Borrow more money from China? Both wrong—we cut spending! Most revealing of their petty power grabbing is that those who opposed this debt ceiling increase under George Bush are now supporting it under Barrack Obama, and vice versa. Their focus on the preservation of political power has made America more vulnerable than any foreign enemy. Last week, amidst their misguided posturing about budgets, Standard & Poor’s lowered the nation’s credit rating to “Negative”, potentially sending the first shot of economic ruin across the bow of every business in America.

With this “shot heard ‘round the world” we need to see one thing—if the people and politicians do not cease their political posturing and reign in their spending, it will be of no importance that America defeated Hitler and Communism or freed the slaves. We must see that the American experiment risks failure if we do not return to fiscal responsibility. We must return to the wisdom of our forefathers. We cannot be distracted by the largest enemy our nation has ever faced—overspending.

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