Hooked On Debt

My parents, who lived through the 1930’s Depression, taught me two rules: don’t buy anything until you can pay for it with your savings; and always save a sizable portion of your income.

The United States, once powerhouse to the world, is hooked on debt. America has become so addicted that regular hits are necessary to keep the economy sputtering along.

Last week’s vow by the Federal Reserve to keep interest rates at close to zero for two more years was a trumpet call to Americans to borrow yet more money. Bankers must have been cock-a-hoop.

A man I once knew was extolling the wonders of cocaine.

"You wake up in the morning with a horrible hangover and feel like death. Then, you do a big line and, presto, you feel like a new man."

He went on. "Problem is, after about 20 minutes, the new man needs another big line." In drug parlance, it’s called chasing the dragon.

The US has been chasing the dragon for a decade.

The crash of 2008 was caused by runaway debt. Washington’s remedy: more debt poison.

To me, as a journalist, author, veteran investor and businessman, debt is poison. A poison that has made our entire economic system gravely ill. Americans and many Europeans have become totally addicted to debt and can’t seem to do without it.

Consider: when Alan Greenspan took over as chairman of the US Federal Reserve central bank in 1987, according to the book "Bad Money" by the brilliant Republican political analyst Kevin Phillips, US public and private debt totaled $10.5 trillion.

Phillips, by the way, was the political thinker who planned and executed Ronald Reagan’s strategy to win the presidency by getting blue collar Democrats to move over to the Republican Party.

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