Economics

MIND GAMES

Posted on February 15, 2016 by halviv

The degree to which one is either happy or discontent with life usually depends upon that person’s level of expectations. If one expects to achieve lofty goals but falls noticeably short, he or she will likely be quite miserable throughout their existence on this planet.  Conversely, contentment and peace of mind is often achieved when one lowers his or her expectations to a level that’s within their power to attain. If you doubt me on this, consider the following.  Since the end of WWII, four of the greatest American celebrity pop-culture icons self-imploded at a fairly young age. Each individual had achieved vast wealth and fame, with millions upon millions of adoring world-wide fans. Stuff that most ordinary people wouldn’t even allow themselves to dream of. And yet all of that was not enough, as each of the four self-destructed. 

I’m talking, of course, about Elvis Presley, Marilyn Monroe, Michael Jackson, and Whitney Houston. Elvis, often called the King of Rock&Roll, just could not cope with all his world-wide successes. He began overeating and became fat, and finally did himself in with pills, (either uppers or downers) in 1977, at the ripe old-age of 42. Marilyn Monroe, blonde bombshell, sex-goddess, adored by millions, went from one failed marriage to another, and finally became unhireable by the movie studios because of her temper tantrums and erratic behavior. The fact that she had slept with a sitting President and his brother, the Attorney-General, apparently didn’t seem to impress her. She made it all the way to age 36, before overdosing on barbiturates. Michael Jackson, often called the greatest pop entertainer of all time, nevertheless, could not get to sleep at night without the infusion of powerful drugs. One night, those drugs did him in at age 51. And Whitney Houston allowed her immense talent to dribble away because of  bad relationships and drug abuse. She bit the dust in 2012 at age 49.

These upper-tier celebrity self-implosions were, by no means the end of it. Other recent famous suicides include Robin Williams and Philip Seymour Hoffman, two men who also seemed to have it all. So why would these famous stars, who appeared to have everything this world could possibly offer, kill themselves while the rest of us plow on through the daily grind and chaos of living. I would submit it’s because of the mismatch of expectations versus reality. When life’s expectations become so stratospherically unattainable no matter what one may have achieved, suicide often becomes the logical end-game. Consider, in contrast, the poor sugar-cane farmer in Brazil, who ekes out a barely sustainable living from selling the crops he harvests on his small farm acreage. He does back-breaking work in the fields for little pay; but it’s enough to put a roof over his family’s heads, and food on the table. At the end of the day he cherishes the small amount of leisure time afforded him, and sleeps soundly without the need for drugs. He has no expectations of vast wealth or glamour or fame, but is happy to be able to provide the bare essentials for himself his family. I guarantee that you will never read about him committing suicide. 

I bring all this up because of the supposed unhappiness of the American electorate at this point in history. Poll after poll shows a large majority of Americans as being unhappy with the course of events materializing in the U.S. these days. And not just unhappy; but often angry or furious. According to these polls, most Americans believe that the country’s best days are behind us, and that the U.S. is on a downward spiral in both its economy and in foreign affairs. According to them, the economy is flat or stagnant and the average citizen is being screwed over by bankers, hedge fund managers and other Wall Street sharpies. In foreign affairs, Islamic-Jihadist terrorists are the new barbarians at the gates chipping away at Western society, the way that the Huns and Vandals chipped away at the Roman Empire and eventually brought it to its knees. Young people supposedly believe that their lives will never be as good as what their parents achieved. To some extent these feelings are valid, but are being considerably overplayed unscrupulous politicians. 

As proof we only have to go back seven short years to early 2009. The economy had just tanked, and the unemployment rate had skyrocketed to well over 10 percent. Today it stands at just under 5 percent. Everyone that owned their home seemed to have a mortgage that was “under water,” i.e. the value of their houses were less than the mortgage amount. Even if they were able to sell their houses, the proceeds would not be enough to pay off the bank loan. People were just walking away from their homes leaving the banks to hold worthless mortgage paper, as if such paper was a rotting fish. Today, one never hears the term “mortgages under water” anymore as both the economy and real estate values have stabilized. Yes, wages have been stagnant, but so is inflation. And the sharp reduction in gasoline prices we’ve been experiencing recently is equivalent to huge tax reduction for people that drive, which is most everyone. The more one drives, the bigger the savings. On an inflation adjusted basis, gas is now cheaper than it was in the late 1950s, when I first received my license.

On the foreign front, the Islamic Jihadists do have the ability to make international headlines through random acts of barbaric terror. While these acts can be alarming or terrifying, there is virtually no threat or scenario under which Western civilization, as we know it, will be destroyed by the Jihadists. Rather, once the West increases its military operations and pressure, it will likely be the terrorist organizations that will face demise. So I guess the moral of the story is that don’t let unscrupulous and demagogic politicians running for office play mind games with your head. I won’t mention names in this piece, but you know who they are. 

The U.S. and Western civilization is not falling apart, but is actually, to a large degree, thriving. The U.S. economy is not great, but it’s definitely on the upswing. Civilized forces will eventually destroy the terrorist barbarians. Keep your expectations level-headed, and eventually the forces of good will come out on top.

 

 

Categories: Economics, ELVIS PRESLY, MARILYN MONROE, MICHAEL JACKSON, WHITNEY HOUSTON, THE STATE OF HAPPINESS VS. UNHAPPINESS, human affairs | Leave a comment

THE STATE OF WORLD INEQUALITY

Posted on February 8, 2016 by halviv

An interesting statistic was published recently that didn’t get near the publicity or commentary that it deserved. According to a published report, 62 individuals who occupy this planet have accumulated the same amount of monetary wealth as half of the planet’s population. That’s over 3.5 billion people. In other words, 62 individuals have the same amount of material resources as do the economically lower half of Earth’s populace. Thus are the wonders of world capitalism that goes largely unrestrained. The breathtaking enormity of the implications behind this statistic should give pause to anyone that considers what it means to be part of the human condition at this point in time at this particular spot in the universe.

The absurdity of such wealth inequality can be best illustrated in current lifestyles prevailing among Earth’s continents. While millions in the U.S. and much of Europe fret that their lives have become almost meaningless because Apple still hasn’t put the new I-Phone 7 on the market, huge chunks of Africa, as well as large parts of Asia and Latin America, still lack electricity, sanitary drinking water, and decent bathroom facilities. For these people, a computer would be as foreign an object as a a meteor that came hurling out of the sky. Many on this planet working full time, still earn less than a dollar a day, and live under the most wretched of conditions.

To understand how all this came about, one has to return to the early days of the industrial revolution that began unfolding in the 19th century. Until that point most of the world’s population was employed as either farmers or shopkeepers, and poverty dominated in virtually all societies. Large concentrations of wealth at that time also existed among the few, who were generally monarchs and royalty that ruled most nations. But as the U.S. began its expansion in the 1800s, and with a democratic, laissez-faire government ruling the country in lieu of a monarchy, the landscape was fertile ground for development of the industrial revolution. Suddenly, a powerful force of energy known as electricity was discovered. It was discovered that oil could be excavated from the ground instead of having to rely on the killing of whales. New-fangled electronics such as the teletype, telephone, photography, and the electric light-bulb began coming on the market. A railroad system that would eventually run from coast-to-coast was in the making. And then, toward the end of the 19th century, a mammoth innovation took place with the invention of the horseless carriage. Mankind, at least in the U.S. and Europe  was on a roll, or so it seemed.

The unquenchable demand for all this output added great wealth to many societies, as capitalism provided the economic fuel that underwrote the industrial revolution. But the problem was that while certain people had an inherent talent for exploiting the industrial revolution to become fabulously rich, such as the John D. Rockafellers, or Andrew Carnage’s, others were not so fortunate. Most people who participated in heady times of 19th century industry worked for what became known as “coolie wages.” Coolies were mainly Chinese immigrants brought over to the U.S. to lay track for the developing coast-to-coast railway system. They were paid virtually nothing, and were given dismal, ramshackle quarters to sleep in, some unrecognizable slop to feed on, and usually worked 12-14 hours daily. Most died at an early age. From clothing sweatshops in Manhattan to to the drudgery of coal-mining in West Virginia, most of what was known as the working class faced similarly dismal conditions, and could be considered as capitalism’s casualties.

When Henry Ford started mass producing his automobiles in the early 20th century, he  introduced the concept of paying his employees a “living wage” which he figured was $5 a day at the time. It was good for business he claimed, besides being the decent thing to do. Thus, over the next century, many of capitalism’s rough edges started to smoothen out. Legislation was passed halting the exploitation of children in the garment and other industries. Labor unions became legal as did the right to strike for better wages and working conditions. Safety standards were established to minimize workplace accidents and casualties. The list goes on. Unquestionably, workers today in the U.S., Europe, most of Asia and parts of South America face far better working conditions and earn far better wages than their 19th century counterparts. Still, in many parts of the world, mind-numbing poverty and the most wretched living conditions continue to exist. The problem is inherent in the very nature of capitalism.

Some people’s genetic makeup is tailor-made to exploit a capitalistic economic system. Wall Street bankers and investment firms, hedge fund managers, venture capitalists, etc. generally thrive, (at least monetarily) under capitalism; while others, such as artists, writers, musicians, sculpturers, etc. generally do poorly under the same economic order. The artist may posses the same intelligence as the successful financier, but his or her mind is not made to undergo the rough and tumble competition it takes to succeed in a capitalistic society. Vincent Van Gogh or Edgar Allen Poe may have turned out the most brilliant pieces of art and literature, but both died penniless because the didn’t know how to function in a world predicated on laissez-faire capitalism. Success usually requires knowing how to defeat the competition, and artists tend to be very non-competitive. The 62 people I mentioned earlier that have as much wealth as over 3.5 billion individuals, obviously have the genetic talent to totally exploit existing capitalistic societies.

Actually, capitalism, and its inherent wealth inequality, is based almost totally on the random nature of human existence. Go into any children’s cancer ward in any major hospital, and ask why those children are  lying there bedridden or dying, while their former classmates are chasing each other around the school playground in perfect health.  All part of the randomness of the universe which doesn’t care or seek involvement in the turmoil of the human condition.

 

 

 

Categories: Economics, human affairs, politics, the Depression, Uncategorized | Tags: , , | 2 Comments

THE GOLDEN SHOWER

Posted on January 25, 2016 by halviv

Last week, at one of his campaign rallies, Trump made the bold prediction that if he stood in the middle of 5th Avenue in New York, and randomly shot someone dead in the street, there would still be no diminishment of support among his followers. And he’s absolutely right. So strong is the blind faith among his growing mass of adherents, that there is literally no act that Trump could perform that would in any way dissuade his fanatical adherents from supporting him. Or as one columnist put it, if Trump were on stage at a large campaign rally, and suddenly began to urinate on people in the first row, those in the back would come surging forward to also benefit from this “golden shower.” Awhile back, when Hillary Clinton was slightly late returning from a bathroom break during one of the Democratic debates, Trump called it “disgusting.” Which is understandable since Trump is rich enough to where he can hire someone to go to the bathroom for him.

In any event, I thought it would be interesting to attempt to understand what motivates this fanatical following for someone essentially espousing a neo-fascist imperative. In a nutshell it can be boiled down to talk radio and Fox News. For 25-30 years these sources have been poisoning the airwaves with a steady drumbeat of hatred and vile rhetoric directed against progressives, liberals and Democrats. Now, after 3 decades of all this vitriol, which has leached huge volumes of poison into the American mainstream, such efforts are finally paying dividends for the haters; which include Rush Limbaugh and Sean Hannity on the male side and Ann Coulter and Laura Ingraham on the female side. To say nothing of all the Rush and Laura wannabes that broadcast from every city in the country. To also say nothing of the daily bile put forth by Fox News against Barack Obama, Hillary Clinton, and Democrats in general. These broadcasters command millions of devoted viewers and listeners, who then spread this venom amongst friends and families and others throughout their neighborhoods. Sort of like a rippling effect in a lake. Who better to take advantage of all this poisonous hate circulating throughout the country than a neo-fascist demagogue such as a Donald Trump.

As I’ve written before, one of the most venom, rage filled such broadcasters is named Michael Savage, who calls his program the Savage Nation. His real name is Michael Wiener, but I guess the Wiener Nation wouldn’t sound all that imposing. He also claims to have millions of devoted listeners.  Anyway, his speech is so filled with pure, undiluted, outright hatred toward Obama and the Democrats, that England saw fit to put him on a list banning him from entry into that country. Others on that list are mostly serial killers and terrorists. But in this country he has total freedom of the airwaves. (Maybe it’s time to re-think that freedom of speech thingy in the first amendment.) None of this bothered Trump, however, who went on the Savage Nation and thanked Michael for his strong support. Another fine bromance, similar to the one Trump established with Vladimir Putin, the tyrant dictator of Russia.

In the 1920s, when Adolf Hitler, was first starting his quest for power, most Germans considered him a fringe crackpot. After all, Germany was not some backwater, hicksville country. To the contrary, most Germans were well educated, and Germany had a rich culture of music, literature, art, and philosophy. Hitler blamed the multitude of Germany’s problems on a small minority of Jews, who were mostly shopkeepers. Similar to the way Trump has blamed virtually all the woes in this country to undocumented Hispanics. Who, at less than 11 million, now comprise about 3.5% of the U.S. population of over 320 million. Who the vast majority of Americans never have any contact with. As I’ve said, most Germans in the beginning considered Hitler part of the lunatic fringe. But through demagogic persistence, and through the force of Hitler’s dominating personality, more and more Germans began to fall in line with Hitler’s message of hatred toward Jews. More and more Swastika arm bands began showing up in the public square. And the rest, as they say, is history.

So, today in this country, we have another fascist purveyor of hate, also with apparently over-powering demagogic abilities that convince large numbers of people to follow him down his rabidly destructive pathways. All set in motion by nearly 3 decades of vitriol and venom emanating from talk radio and Fox News, who planted the seeds that make Trump’s landscape so fertile. During the 1930s, after Hitler took power, the Nazis conducted huge parades through German cities where thousands or tens of thousands of  gleeful Germans would line the boulevards to show their adoration of Der Furhrer. But by the 1940s, when these same cities were being bombed into heaps of rubble, the blinders finally fell away from German eyes. Lets hope it never quite comes to that, after Trump takes command in the Oval Office.

 

 

Categories: Economics, human affairs, politics, Uncategorized | Tags: , , , , , , , | Leave a comment

THE FREAK SHOW

Posted on January 18, 2016 by halviv

I had promised myself that I wouldn’t write about Trump at least until it was clear that he would become the Republican nominee. But the latest shenanigans going on in that continuing circus known as the Republican debates made it all too irresistible. The latest kerfuffle occurred when Trump, always seeking to travel the low road, questioned whether his nearest rival in the upcoming Iowa caucus, Ted Cruz, is really a legitimate citizen of the U.S. Seems that good ole Ted was born in Canada, but to an American mother. That Cruz is a U.S. citizen is undeniable. But the Constitution states that to run for president, one must be a “natural born citizen.” Since Ted was born in Canada, Trump claims that the Democrats could “sue” Cruz’s eligibility to sit behind the desk in the oval office, should he be the party’s nominee. Since mudslinging is the name of the game in Trump’s world, these phony allegations reminded me of the 2012 election when Trump based his attempted march to fame on the “birther” allegation that Barack Obama was not a naturally born U.S. citizen, i.e., that he was really born in Kenya. Didn’t work out too well for him back then, and likely won’t this time around too.

First a few observations. Canada practically is the U.S., and would have been if not for the seditious actions of Aaron Burr, back in the days of our founding fathers. Secondly, most legal scholars agree that Cruz meets the definition of a “natural born citizen” and that Trump’s allegations constitute a “red herring.” It also noteworthy that the Iowa “caucus” followed right after by the New Hampshire primary, have an outlandish influence in selecting 2 candidates, one of which will go on to become the most powerful person in the world. Iowa and New Hampshire combined, constitute 1.4% of the total U.S. population. Yet if one candidate sweeps both states, it gives him or her a powerful leg up, and lots of momentum in winning future primaries in the more populous regions of the country. Such is the irrational or insane method this country employs to select its presidential candidates. Any third or fourth world banana republic would be too ashamed to admit to this method of choosing their leaders. 

So Trump goes non-stop on Twitter bashing Ted Cruz, in an effort to tweet his way to the White House. The latest polls show the 2 of them in a dead heat in Iowa. Now, normally I would be the last person to come to Cruz’s defense, since he’s a right-wing whacko extraordinaire. He’s anti-abortion, anti-gay rights, anti-immigration, and anti-gun control for openers. He’s also vociferously against government assistance to the poor, the sick, and the elderly. (If you’re poor, sick and old, you’re really up the creek without a paddle, in Cruz’s world.) He was instrumental in shutting down the government for 5 weeks in 2013, because he felt it was spending far too much on assistance for the disadvantaged. But, he’s also open and honest about his beliefs and priorities, such as they are, and doesn’t resort to mud-slinging demagoguery in order to achieve his goals. His views were largely shaped by his father, Rafael Cruz, who escaped from Castro’s Cuba, and equates all governments to the way the Castro brothers have ruled Cuba for the last 65 years. Rafael runs a mega-church in Texas, and has passed on his “all governments are tyrannical and godless” philosophy to son Ted who absorbed this type of thinking like a sponge.

Besides the bombastic, bullying Trump, and the far right, delusional Cruz, there’s a whole slew of Republican candidates eager for a shot at occupying the White House. There were originally 17 clowns on stage, and it’s now down to 13, I believe. But the only other candidate performing in these circus shows, that might have an outside chance at winning the nomination, is Marco Rubio. I’ve written about Rubio before; about his youth, good looks and even a dash of charisma, (unusual for a Republican.) There is no question that the young, handsome Marco would easily trounce the aging and highly damaged Hillary Clinton in a final showdown. The problem is that Rubio has run a rather lackluster campaign that has failed to energize most of the Republican base. He could easily win the election, but likely will not be able to secure the nomination. 

Then there are the also-rans like Jeb Bush. Bush used to be Governor of Florida but that was 8 years ago. Somehow Jeb believed that he could parlay the Bush family name into lining up big time cash donors that would buy the nomination and then the presidency for him. He did get the cash donors, but it’s not translating into potential votes in the upcoming primaries. Seems that the mostly disastrous  administration that brother George ran for 8 years, is still on voters minds. The thought of putting yet a third Bush in the Oval Office actually makes some people nauseous. There are also some of the longest of long-shots up on stage, hoping that lightening will somehow strike in their favor. For example, Chris Christie, Governor of New Jersey, believes he somehow has a chance. But it’s not going to to happen and he should stick to blogging about his favorite restaurants in New Jersey. If anyone knows food, it has to be Gov. Christie. And, of course, these circus performances would not be complete without the one woman in the Republican race, Carly Fiorina. She speaks well, and exhibits great poise and decorum. But many years ago, Carly used to be CEO of Hewlitt-Packard, and nearly ran that company into ground with her decision to acquire the Compaq computer company. She was promptly fired from her job because of that fiasco. Then not too long ago she ran for senator in California and was soundly defeated in that quest, primarily because she was vociferously anti-abortion in a very blue state. Put her odds for the nomination at about a thousand to one. And the beat goes on.

There will be many more circus performances to write about before the eventual outcome, which will likely culminate with a Trump nomination. Then look at all the fun I could have, writing about The Donald’s exploits and ensuing disasters. 

Categories: Economics, human affairs, Isis terrorist attack in Paris,, Joe McCarthy, McCarthyism, World War II, Viet-Nam, Anti-Communist Witch Hunts, Army-McCarthy hearings, Islamic Jihadist terrorism, Soviet Union, Red China, politics, Uncategorized | Tags: , , , , , , , , | 1 Comment

PEARL HARBOR REMEMBRANCES

Posted on December 7, 2015 by halviv

It was on this date, 74 years ago, that the pristine, idyllic island of Oahu, in the Hawaiian island chain, was shaken to its very foundation. A sneak bombing attack by 360 warplanes of the Japanese Imperial Air Force on the U.S. naval base at Pearl Harbor on Oahu, decimated virtually the entire U.S. Pacific naval fleet. Only the U.S. carrier force, which was, fortunately, out to sea at the time, was spared. There was a horrific loss of U.S. lives as thousands of sailors died trying to save their ships. U.S. Army and Air Force bases on Oahu were also bombed, adding further to the loss of U.S. lives and military equipment. It was a day, as President Franklin Roosevelt stated in a following day radio address, “that will live in infamy.”

Until then, the U.S. had remained primarily isolationist in a war begun in 1939 by the Axis powers of Germany and Japan. Although President Roosevelt had wanted us to become more heavily involved, the feeling in Congress was that the U.S. was protected by 2 large oceans, and we could, therefore, follow a policy of strict isolationism regarding all the messiness of WWII. Even as Hitler and his Nazi thugs had gobbled up almost all of Europe, and Imperial Japan was conquering one country after another in the Pacific. Finally, with the bombing of Pearl Harbor, the blinders were removed from the isolationists eyes, and the U.S. went all in. It was a time to face reality.

A draft was enacted, and millions of young men were inducted into the U.S. military. Factories that had been producing consumer products had to be converted, almost overnight it seemed, into the production of military hardware and supplies. Food and gasoline became strictly rationed. Marginal tax rates on the wealthy were raised to 91% in order to pay for the war effort. It became everyone’s patriotic duty to buy war bonds. Even grade school children such as myself were enlisted to buy these bonds. Us poor kids would bring nickels and dimes to school each week to purchase stamps that were pasted into a bond book. When the stamps in that book totaled $18.75, we would be issued a war bond worth $25, cashable in 5 years. No one was immune from contributing to the war effort.

Such all-out effort finally paid off although it would take several additional years. It wasn’t until 1945 that the twin hellish evils of Nazism in Europe, and Japanese Imperialism in the Pacific were thoroughly destroyed and discredited. It would take two atomic bombs dropped on Japanese cities to finish the Pacific war. Also discredited was the U.S. policy of isolationism, as it became abundantly clear that the U.S. was the one indispensable nation on this planet. Tens and tens of millions of lives had been lost during WWII and it took the U.S. entry into that effort to save the world and stop the carnage. Unfortunately, the lessons of WWII have not taken deep enough root and the old discredited yearnings of isolationism have now crept back into the American psyche. 

Today the world is witnessing the same type of Fascist evil that propelled Nazi Germany and Imperial Japan during the 1940s. Today, such horrific evil is taking the form of Islamic-Jihadism. The barbaric atrocities being inflicted on helpless human beings by groups such as ISIS, Al-Qaida, and other lunatic Jihadist groups bears testament, once again, that evil is a bottomless pit, and must be torn out by its roots if it’s to be destroyed, discredited, and buried. And once again, the U.S. is the one indispensable nation that has to be called upon to undertake this effort. Unfortunately, the efforts the U.S. has thus far taken have been meager to say the least. They are grossly insufficient to do the job that needs to be done.

Yes, I get it that Americans are sick and tired of war, and just want to be left alone. Yes, I understand that Americans are no longer willing to make sacrifices similar to those made during WWII. Yes, as I’ve said many times, war is the ultimate failure of the human condition. But if we don’t destroy every vestige of this new Fascism, tear it out by its roots, it will continue to metastasize like virulent cancer. It will continue to attract new recruits by maintaining its credibility. If we no longer have the will power to fight off these modern day barbarians, we eventually will succumb to these modern day forces of evil. Much like the ancient Roman Empire became too weary to fight the barbarians at its gates many centuries ago. Rome was eventually destroyed and the world was plunged into the dark ages for a very long time.

Perhaps its in the nature of the universe that great civilizations rise to an apex, and then over time, begin to crumble. When life at home becomes too cozy and comfortable, thereby sapping the will of its citizens to fight and die on some foreign battlefield, in a struggle between good and evil. When we’ve reached that point, the U.S. will no longer be the one indispensable nation on Earth.

 

Categories: Economics, human affairs, Isis terrorist attack in Paris,, politics, Uncategorized | Tags: , , | Leave a comment

PLASTIC AND MORE PLASTIC

Posted on May 11, 2015 by halviv

I know it will be hard for some of you younger readers to believe, but back in my misspent yut, (that’s “youth” for those of you not fluent in Brooklynese), there was no such things as credit cards. It was cash on the barrelhead for all commercial transactions. This was, of course, before the electronics age. My father worked for a large company and was paid every Friday in cash. He would be given a small brown envelop that contained something like $76.23 in bills and coins. This was after deductions for social security and withholding. The first widespread use of a plastic credit card did not come into existence until around 1950, a mere 65 years ago. It was the Dinners Club card which has since largely gone out of existence. But it allowed people to experience something never before experienced in mankind’s history. And that was the instant psychological gratification that comes from from acquiring a product or service at a point in time that a person didn’t have the cash to pay for such items. It became a heady intoxication and it revolutionized the world as it existed back then.

A case in point was a girl I was dating when back in college. She was one of the first persons I knew that latched onto a Diners Club card and she rarely hesitated to use it. Especially on expensive stuff, like mostly clothing. When I pointed out that her family could ill-afford the items she was buying, via her credit card, she cooly replied that: “Well, that’s why God created plastic, isn’t it?”  I didn’t acquire my first credit card until the early 1960s when I was working overseas. It was an American Express card and for many years I seldom used it, fearing that if I started charging purchases, I would fall helplessly into a debt that I could not climb out off.

How quaint were such notions when viewed from today’s perspective. Today, the cumulative private debt racked up by all Americans stands at a shade under $12 trillion. That’s a 12 followed by 12 zeros. The entire commercial world is fueled by debt. In some financial circles it’s not even referred to as debt anymore. Instead it’s called leveraging, as if a debtor’s liability has suddenly become an asset. So where has all these easy money policies and the triumph of the instant gratification mentality led us to? Well, we don’t have to go very far back to achieve a clearer understanding; only back 6 or 7 years to around the year 2007.

It probably all started around the latter part of 2006 when real-estate prices were booming and credit was being issued with little collateral to back it up. When my wife and I bought our first house in the mid-1960s, a 20% down-payment on the purchase price of the house was required in order to qualify for an approved mortgage. I was able to make the down-payment with money I had saved up while working in Europe, and I was only able to to acquire those savings because the Government, at the time, gave its employees generous housing allowances when working overseas. The amount of my mortgage also had to be no more than the amount that was considered affordable based on my salary at the time. By the early 2000s, of course, all those fiscal restraints had melted away.

After the turn of the 21st century, credit became loose and easy, especially in the housing market. People were allowed to purchase homes with little or no money down, and were approved for mortgage limits that were well over their heads, financially speaking. It was the time for the fast-buck artists to make a killing. Housing prices began exploding, and real-estate speculators were riding the gravy train for all it was worth. Prospective real-estate buyers were told not to deny themselves the instant gratification that came with acquiring that big, beautiful house they dreamed of, but could clearly not afford. After all, realty prices could only one way, and that was up, they were told. When their property value increased in a year or two, they could always renegotiate their unaffordable mortgage into something more palatable. And so it went, as the easy money and instant gratification syndrome spread like a plague throughout the country.

Reality prices continued to rise beyond everyone’s wildest dreams, until one day they just didn’t. Suddenly, the air of overinflation began to seep out of the real-estate balloon, until one day the balloon just burst. Housing prices began hurtling downward in a death spiral, until new terminology had to be introduced into the U.S. vocabulary, such as mortgages that went “underwater.” Suddenly a large chunk of the U.S. population found themselves with mortgages that were considerably larger than the shrunken value of their homes. They were underwater. To add to their fiscal woes, as a result of the deep recession that was unfolding due to the plunge of realty values, many people lost their jobs as well. Thus, people suddenly unemployed found themselves with mortgages larger than their home’s value, and with no income being received to make the monthly mortgage payments. Many in this category had no choice but to simply walk away from their house, leaving the banks or mortgage companies holding the bag.

Next up in this on-going fiscal fiasco was the bankruptcy in 2008 of Lehman Brothers, a huge Wall Street financial institution. It seems that Lehman was holding billions of dollars of financial real estate derivatives. When the housing market collapsed, these derivatives became more worthless than the paper they were written, and Lehman was forced to go out of business. Many Americans didn’t realize that the U.S. economy came within a whisker of going belly up after the Lehman bankruptcy. People would have inserted their ATM cards at their bank, with a sizable amount of funds in their accounts, but nothing would have come out. Banks would have begun shuttering their doors. Credit cards would have become useless.  The whole enchilada, financially speaking, would have been gone.

Actually, it President George W. Bush’s Secretary of the Treasury that came to the rescue. He quickly instituted the Troubled Asset Relief Program, (TARP), which said that the Government was willing to pour seven hundred billion dollars in to the economy in order to avoid economic disaster. With that action the country slowly edged away from the financial precipice it was clinging to. In the six years since then, the American economy has achieved a remarkable recovery, although it’s still short of where it should be.

In the meantime, the mindset of instant gratification through use of credit cards, unaffordable mortgages, or other fiscal instruments continues to grow. Why put off for tomorrow, that which will bring us great pleasure today. So what if I can’t afford the new and very costly Apple Watch, which I don’t really need in the first place. That’s not going to stop me from purchasing one today. On credit, of course.

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