A Nation Shamed by Debt

Yesterday, Victor Davis Hanson took America’s emotional temperature and concluded that our nation is ashamed at being the world’s biggest debtor nation. Link here.

Surely, this was one competition that we didn’t want to win. We didn’t even want to compete.

The shame expresses a foreboding, a knowledge that paying our way out of debt is verging on the impossible.

Of course, there’s debt and there’s debt. If you can easily service your credit card balance, you are not going to feel ashamed of your debt load.

If you take out a mortgage that you can afford, only to lose your job and fall behind on your monthly payments, you will feel some sense of shame for failing to fulfill your obligations.

But you will think that as soon as  you get a new job, you will get back to paying your mortgage.

If you become unemployed for too long, or if your new job does not pay well enough to allow you to service your debt, you might be lucky enough to find a banker who will allow you to take out another loan so you can pay off your mortgage.

Usually, this happens when you are too big to fail, when the bank cannot recoup its money by foreclosing on your property.

If the bank is doing you this favor, you will be hiding your shame, but you will know that this is not going to last forever. Worse yet, the longer it goes on the more you owe. Eventually, you will get to the point where no job pays well enough to allow you to pay it off. Or better, when the bank runs out of money.

The latter circumstance most accurately describes our nation’s current relationship to debt. We keep borrowing money; people keep lending us the money; and we know that we will never be able to pay it all off.

We could argue about who is at fault, the borrower or the lender, but still, when you are the borrower, and you depend on the kindness of strangers, you start feeling like you are receiving charity.

You lose your sense of self-reliance; you lose your self-respect; you feel like a beggar. After all, you have little to offer in return for the loan.

The bank’s generosity, or foolishness, is merely postponing the inevitable.

As Hanson suggests, this costs you your pride and your reputation. And it makes you feel depressed.

You will travel around the world, hands outstretched, palms up, not in a gesture of friendship, but in a plea for help.

All the while you know that you are not going to be able to pay it all back.

You will feel bad enough for knowing that there is no quick fix. How will you feel when you recognize that there does not even seem to be a slow fix.

Or else, as everyone seems to know, the only way we are ever going to have a chance to pay off our debt is by inflating our currency. We cannot pay it off with today’s dollars, so we can only hope for, or, in the case of the Federal Reserve, work to produce inflation.

But, paying off debt with inflated currency feels like cheating. If you borrow $1000 when $1000 will buy a laptop and pay it back at a time when $1000 will buy two candy bars and an iced latte, your lender will feel cheated.

You will not feel that you have restored your good name. Worse yet, your lenders will start thinking of you as a bad credit risk.

For the foreseeable future, you will have more and more difficulty borrowing money. And when you do, you will be paying much higher interest.

As the national debt ascends into the stratosphere, many Americans have figured out that it can never really be paid off. No matter what they do, they will come up short.

When you see alternatives that are not real alternatives, you are going to become depressed and demoralized. When action seems futile, you retreat into passion. Then you will start feeling angry.

Under the circumstances, it might be the only sane emotional response.