Americans are hard at work at staying in debt

by J Scott Christianson, Columbia Daily Tribune Columnist

Oh what a fun time!

Presidential primaries are in full swing, and the stock market is dropping nearly 300 points every day. It’s like watching a WWE cage match taking place on the deck of the Titanic. If anything, it lets us see how candidates react under pressure. Some, such as Rudy Giuliani, run back to their corner screaming, “Tax cuts, tax cuts,” while others such as Ron Paul and John Edwards come out swinging against the corporate takeover of the economy only to be thrown overboard by reporters.

But the presidential candidates shouldn’t really worry. Our current president has a plan and should have the economy “fixed” long before Inauguration Day 2009. Right now, President George W. Bush is considering handing out $800 tax rebates to American consumers. As a student of economics, you can clearly understand how this will help. What? You didn’t study economics? Or you only studied “old economics,” back when deficits mattered? Then let me explain.

Today’s economy is driven by the consumer. The consumer is constantly informed through advertising and entertainment programs about all the things he or she must have to be happy, regardless of whether he or she really needs them for survival or happiness. As such, today’s consumers will borrow large sums of money to get whatever it is they believe they need: big houses, new cars, new home entertainment systems, etc. U.S. consumer debt — debt excluding mortgages — has risen to $2.5 trillion in the past years. That’s about $8,300 of debt for every man, woman and child in the country.

Gone are the days in which a consumer would save up for a purchase. That is old-school thinking. Instant credit equals instant gratification. In today’s economy, living beyond one’s means is a fine way to live. In fact, living a modest lifestyle can be a sign that there is something seriously wrong with you.

So consumers toil at their jobs, paying an even larger portion of their incomes to interest and fees on their borrowed money. Which leads us to the real beneficiaries of our new economy, the debt investors. Debt investors make their money on extending debt to consumers, living entirely off the interest and fees that consumers pay on their debt. Debt investors are the owners of companies such as Merrill Lynch, Citibank and UBS and invest in types of securities that most of us have never heard of — such…