Do We Need Proof?

In case we need proof that the average person is smarter than the government they elect, consider this.

A household is run by some common sense rules regarding finances. When the source of income decreases, dries up, or threatens to do so, there are some common things the average person does. He will be very careful with his money, making sure not to waste any. He will pay down debt so his 'stuff' cannot be confiscated. He starts saving in case things get really bad. This is part of recession, this lack of spending.

A business is just a large household and will do the same things in tough economic times.

A government is just a VERY large business but what does it do? The exact opposite of what common sense would dictate.

The savings rate in the USA (I do not have figures for Canada but they would be similar) has now risen from zero a year ago to 3% and is expected to top 10% soon. People are saving. They have learned from the mistakes of overspending and using credit to the max. The government on the other hand, is spending 15% (of GDP and $100,000.00 for every family) and it is rising.

Now you tell me. Are the bailouts working? No. If you think the rise in the stock index is a sign that things are working, think again. This is the rally before the big drop. Unemployment continues to rise and default mortgages are still on the increase.

Our children and our children's children will look back at this time in history and tell themselves "We will never do that again!" They will see that a healthy economy cannot be built on debt but rather on prudent spending, saving, and only buying what can be afforded. Why cannot our governments see this now? But then I guess it is too late now. They are committed to their folly.

Again, I say, I hope I am wrong.