Let’s say you have $500 that you want to loan to someone at a reasonable rate of interest. Let’s say you have narrowed your loan candidates down to two possibilities. The first possibility is to loan the money to a member of your own family. You realize the interest rate might be a little lower but you trust your family member to honor the loan and repay it.
Your second possibility is to loan the money to a rich person across town who seems to have more money than they need and they just choose to borrow money to maintain a certain standard of living. Your realize the rich person on the other side of town is a spendthrift, but they have great references and you have a lot of faith in their ability to survive difficulty and keep on trucking.
Then, on the brink of pulling the trigger of making the loan to the rich guy you learn some facts about the behavior of the the person:
1. The rich person has recently embarked on an incredible spending spree and has done it on borrowed money. As a matter of fact you learn that almost 50% of every dollar they spend is borrowed from other people, like you!
2. The rich person has been totally ignoring warnings from its lenders that the borrowed money they are spending is toxic and deadly to their long term survival. Yet, the person continues to spend in an irresponsible rush to disaster.
Armed with these new facts you decide that you don’t want to loan your $500 to the irresponsible rich person and elect to loan your money instead to your family member, who is close to home and behaves more responsibly than the rich lunatic across town.
About a year later you learn that the rich person has exhausted its resources to obtain loans and is going bankrupt. All the people who had loaned money to the rich person in previous years have evaporated.
What’s the meaning of this?
1. The United States of America is the rich person across town behaving like a lunatic.
2. You represent the foreign investors who are financing the spending spree of the lunatic and have little or no hope of being repaid the $12,000,000,000,000 of debt accumulated by the lunatic.
Here’s the question: What happens when the lunatic can no longer borrow money to to pay its bills?
Nobody seems to want to know the answer to that question and that is our national crisis.