Look familiar? This is a cartoon from the 1934 Chicago Tribune.
It was this profligate spending that made the Great Depression last until the onset of World War II. In fact, it took WAR to finally pull us out of the Depression and it was Global Depression that made the WAR possible.
We all know what happens when we spend money we don’t have. We go into debt! Then if we lose our job, which Americans are now doing, we can’t pay our debt off and the people we owe to go bankrupt along with us. We owe China more than any others and China’s dreams of becoming the next dominant World Power are hooked to their prosperity, which is collapsing along with the value of all those Treasury Bonds they bought by giving us back many of the dollars we spent with them.
The Bush Administration suckered China in by getting them to loan us all that money. That wasn’t the plan, probably, but that’s how it’s working out. Our financial collapse has doomed China to implode and as that sinks in, they’re going to start getting more aggressive on those they see as weaker. They won’t give up their dreams easily and they’ll try to get what they can while they can still get it.
Massive money printing only causes inflation, and inflation at the same time as a depression makes things horribly worse. Look. You have millions of people now with no money because they lost their jobs, and at the same time, prices of everything go up because of the inflation. That is, instead of $2 to buy a loaf of bread, it takes $4 or more. BUT… no one has the $4 to buy the bread, so the bread maker has to sell it for $1.50. The problem is it cost him $1.40 to make it himself, since he had to fire all his hired help, and he can’t stay in business on a dime profit.
So he has to shut his bakery and then no one can buy bread. This means everyone who wants bread has to bake their own or starve. Lots of people starved to death in the Great Depression, here and all over the world. They’re starting to again.
We aren’t spending ourselves out of a Depression, we’re spending ourselves into a worse one than we would have had and increasing the chance of another global war.