Spend WHAT Money?

I am always astonished at economic news these days.

I keep reading about economic fixes that are supposed to make shoppers spend more money, to end the recession, etc. etc. etc. And I must continually ask myself, "Do these people all have their heads up their butts?" If you'll forgive my crassness, I'll explain:

I am not an economist, and only in general terms do I have an understanding of the stock market, but I understand microeconomics very well (in my own mind, anyway). I read all of these incredible economic articles over the holidays about how consumers should SPEND money as much as possible, and that would generate power in the economy to overcome the mortgage crisis.

That is a load of bull.

I was sitting on my bank account, which, after Christmas, counting credit used, was significantly negative, and wondering, "What money do they want us to spend? Do they imagine, somehow in their world of wildly inaccurate mathematical models, that I HAVE money to spend? Do they intend me to use credit?" Like the good American consumer, and newly married man, that I am, I DID dip into my credit. Guess what? I will now pay the bills, my debts will be bid on by far away buyers and sellers, and I will pay them back, with interest (although hopefully less than my credit card companies hope I will be paying- I use an accelerated schedule), and the world will be wonderful again. Right?

Of COURSE NOT!

Merciful heavens, if we all continue to spend money that we don't have, as silly economic news articles urge us to, then we will have ANOTHER subprime mortgage crisis on our hands.

Let me explain:

I have three credit cards. My wife and I make around 35,000 a year combined, because I am going to school- she makes the money, not I- it would be a bit, thought not too much, higher if I also worked full time. I imagine, in my little paradigm, that economists look at the amount of credit available to consumers when they describe their plans to boost the economy through consumer spending. But they don't consider that the same thing is happening with credit that happened with subprime mortgages- an illusory benefit that one day disappears- as the current crisis shows us. Of the three credit cards, one has a 15,000 limit. At that cards interest rate, we would NEVER be able to handle payments on even HALF that limit. What on earth is that? So many standards are flying around (credit card companies likely don't intend us to approach that limit, many economists likely expect us to treat the entire 15,000 as disposable income) causes chaos, and we will pay for it.

In short, in this very disorganized and rushed diatribe: We are mortgaging our future economy by trying to make our current one not enter a recession. Credit is nice, but we are using it WRONG and the average balance someone carries is a very, very bad thing (I believe it's around 9000 dollars) and WILL cause us economic woe.

The entire subprime crisis was caused by someone deciding that subprime mortgages are no less likely to be repaid than ordinary ones. Someone has also decided, I think, that these balances are not intrinsically harmful. They are dead wrong, and the economy will play itself out to show them so.

We, as a nation, have got to learn to live within our means, and then, and only then, will our economy settle down to where it should be, and not to unrealistic, and even outright fake, highs boosted by fake money in the form of wrongly used credit.

That will be all, cadet. MARCH!