From The St. George Spectrum:
The Church of Jesus Christ of Latter-day Saints late President Gordon B. Hinckley urged the members frequently to get out of debt, pay off their houses and live within their means. It did not take a prophet to see that America’s economic house was built on the edge of an eroded cliff and that the torrential rains would soon send it sliding down. His warnings were largely ignored.
Conversely, President Bush in response to 9/11 pronounced that it was American’s patriotic duty to spend more. He said al-Qaida was trying to intimidate us into an economic retrenchment. Now that was the kind of leadership America likes. Give us some more tax money and some lower interest rates and we will be glad to spend our way out of any threatened recession.
During World War II, Americans were asked to buy savings bonds. We were asked to sacrifice our personal consumption to produce and to save. Now the Bush/Reagan voo-doo economics tells us that we can afford to conduct trillion dollar wars across the globe so long as we keep spending. Deficits? No problem. We’ll just borrow the deficit from our enemies.
Our flagrant debt mongering comes at a time when the manufacturing segment of our economy has declined to modern lows. Where is government leadership in fostering the manufacture of real wealth? Americans are not concerned that nearly all the electronic goods, televisions, computers, clothes and shoes they buy come from Asia. We don’t think we need to produce anything. We make our money speculating on real estate.President Hinckley said we should pay off our home. But that bucks government policy. We get our best tax deduction from home mortgage interest. How many times over the last years of the real estate bubble did we hear financial gurus advise us to borrow against our homes to buy more real estate. With this “leverage” one need not actually earn capital to invest. The Federal Reserve Banks’ lowering of interest rates was designed to promote this speculative bubble in housing. After selling a parcel of real estate the tax law encouraged the purchase of another parcel to avoid tax. Government policies induce spending and discourage savings. We have thus become the biggest debtor nation in history.
Our savings rate is now in the negative. In the aggregate the individuals in our nation spend more than we receive in income. The savings rate in China is 50 percent, in Japan in the 25 to 30 percent category. China promotes our consumerism by selling us cheap goods. We pay in dollars, and China invests its dollars, in U.S. treasury notes. We owe China more than $400 billion in treasury notes. Our trade imbalance with China now amounts to $1.4 trillion - $4,000 of debt for every American.