Uncle Sam's liquid courage

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John O'Connor, Editorial Director
John O'Connor, Editorial Director
In boardrooms and across kitchen tables, much hand wringing is taking place. At issue is whether the nation may be on the cusp of a recession, or maybe worse.

Judging by the knee-jerk reaction from the Fed, you'd think it's October of 1929 all over again. As this goes to press, the boys who determine and guide monetary policy announced a $200 billion sweetheart deal. The measure would allow financial institutions to borrow ultra-safe U.S. Treasury money by using some of their riskiest investments as collateral. It's all in the name of pumping liquidity back into the market.

Well, that's Wall Street for you. Talking fiduciary responsibility is one thing. As for playing it? Well, these are tough times, and it is an election year.

What's a bit more of a head scratcher is a scheme the White House hatched and Congress eagerly approved. That one's intended to send the nation on a $170 billion shopping spree. Under this attempt to keep the dreaded “R” word at bay (at least until after the November elections), most of us soon will be getting checks from Uncle Sam. Amounts range from $300 to $600 for people who have an income between $3,000 and $75,000, plus $300 per child. Couples earning up to $150,000 would only get $1,200 in “free” money. 

Don't get me wrong. I'm no fan of recessions. For one thing, people tend to lose their jobs during them. I sort of enjoy having mine, especially when my friends at Visa and the power company send me their monthly correspondence.

And it hardly makes me feel tingly inside to ponder whether this industry's marketers – who just happen to pay most of our bills – might be in for some rough sledding. Usually when the economy tanks, advertising commitments dry up faster than the Kalahari Desert in summertime.

So maybe these liquid infusions will help give millions of people the courage to spend more. Maybe they won't. Regardless, they hardly help resolve a much larger fiscal crisis that we are blissfully sleeping through. 

Don't mean to sound like an alarmist. But there's an eye-popping $9 trillion gross national debt sitting on top of our collective in-box. We live in a nation of about 303 million people, which means that each person's share of the current debt is nearing $31,000 at the moment. And things are only going to get worse.

In our heart of hearts, we suspect that the tab will land on our laps. But what's more likely, and perhaps more detrimental, is that we are going to pass along a massive IOU to generations that had nothing to do with our fiduciary irresponsibility.

Pumping cash into a sluggish economy is one thing. But when the time comes to settle up, we may need a different kind of liquid.