Punchinello’s Chronicles

September 11, 2008

Smoke & Mirrors — The Modern US Economy

Filed under: Surely a Jest? — Punchinello @ 4:09 pm
Tags: , , ,

So there’s this girl Sally who’s in love with Bob, the captain of the high school football team. Bob is a popular guy, and everyone wants to be around him. He knows Sally, but he’s got other things on his mind. He wants this gizmo that costs about $50.

Sally does some thinking, then approaches Bob. She tells him she’ll loan him $50. He’s very happy about that, and decides to go on a couple of dates with Sally. Everything is wonderful; Sally’s with Bob; he’s got his gizmo, and the world is in balance.

A month goes by and Sally asks Bob if perhaps he’d be okay with giving her back the $50.

At that point, Bob says he’s having a bit of trouble right now, and would it be okay if he didn’t give her back the money just yet. She’s still excited that she’s going out with him, so she says it’s okay. Then another month goes by, and Sally really could use the fifty bucks. Again, Bob’s having difficult times and doesn’t have the payment.

Sally’s feeling poorly. If she pushes Bob, he’ll have to fork over the money and go broke, or he’ll just go broke and tell her to go away. That wouldn’t be any good, because then she wouldn’t be able to date him. So she comes up with a great idea!

She’ll lend Bob the $50 so he can pay her back. That way she’ll have her money, Bob won’t go broke, they’ll still be dating, and the world will be in balance!

Hmm…wait a minute! Isn’t something’s wrong with this picture? Oh, I know! When all the dust settles, the smoke clears, and Hollywood packs up the mirrors, it seems to me that Bob now owes Sally $100! Twice as much as he owed at the start of our story.

Are you reading this, wondering what kind of a nutcase is Sally? Have you met folks like Bob before? Would you lend Bob another fifty bucks? You wouldn’t? Think you’re a better judge of character, and Sally’s a bit pathetic?

Oddly enough, this is pretty much exactly what’s happening with China and the United States. The money that went to clean up after Katrina? Know where that came from? China. And how many payments are we making to pay off that debt? Um…none? But most people in China are literally dirt poor and can’t afford to buy the things made in China. Only Americans can afford all that. So if we go broke, what happens to the Chinese economy?

The problem is that in order for China to keep going they have to get paid back by the US. And in order for that to happen, America has to borrow money to make the payments. So we borrow from China, they get their loan payments, everybody’s happy, and the world is in balance.

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