Circular Lending & The Economy

Imagine that you are a family facing tough times (not much of a stretch these days, I know). You have some assets, but lately they seem to be equaled or exceeded by the debt load that you carry. Revenue continues to come in, but it seems that it does so at a decreasing rate. You make your payments (at least the minimum); but with a tough economy, you are finding it tough to balance the budget. As a consequence of the increasing burden on your budget, brought on the the continuing struggle of the economy, you find yourself sinking slowly and inexorably into increasing debt. 

Finally, reaching a point where you think that there is nothing you can do and pushed to your last alternative, you proceed to ...

... sign two new credit card applications and proceed to max the suckers out in an attempt to fix your budget problems.

Sounds pretty ridiculous, doesn't it? There is no way in hell that you can hope to balance household budget by putting yourself into even more debt. Increases in the total interest that you will be obligated to pay on the higher balance, higher minimum payments due because of the increase in debt load that you just assumed, and probably higher interest rates for the money that you borrowed (because your credit can't be that good by now) mean that not only will you not recover from the original problem; but that you will now have created a situation that you have no hope of recovering from. 

So maybe you can tell me why that is exactly what our government just proceeded to do. After complaining for the last eight years the impending doom of government deficit was looming like a Sword of Damocles above the country, the only solution that they can discover is to increase the number of weapons hanging above us. Do the expressions "one-armed paper hanger" or "one-legged man in an ass kicking contest" mean anything to you? Now I am not a leading national economist, but I do have some experience with crushing debt. 

I likewise have some experience with the concept of how to balance a checkbook. Perhaps such talent is exactly what's needed in Congress today. Perhaps the experience of spending other people's money in Congress, of passing legislation on spending that have no real impact over those very members of our legislature, of having the ability to print more money when they run out has simply gone to their head (turning it to the consistency of tapioca pudding). 

Hey, maybe the answer is that I should put myself in line for the job of Treasury Secretary. Maybe in fact, I could just move in and take over the job. After all, I'm sure that to the unwashed public (you know, us) all Timothy's look alike anyway. ... Nah