The Problem With Debt

By now many of us and our fellow countrymen realize that they have spent to much. They realize that they should have purchased a smaller home and cheaper car. They now realize the overwhelming burden of debt. Our Founders realized that debt was a heavy burden. Indeed, they stated that it was just as destructive to freedom and liberty as a lack of military strength.

The men responsible for the Founding of this nation were well aware of the fact that from time to time the government would have to borrow money. That did not make them any happier about going into debt. Debt was to be temporary and done away with as quickly as possible.

Many of the Founders believed that borrowing would have a numbing effect on a person. Indeed, Jefferson stated, "The maxim of buying nothing without the money in our pockets to pay for it would make our country one of the happiest on earth....I think every man will remember that (the war), under all the privations it obliged him to submit to during that period, he slept sounder and awoke happier then he can do now." Jefferson stated that inherited debt was immoral and that everyone "should consider themselves morally bound to pay them (the debts) themselves".

These statements coming from Jefferson are a bit ironical when one looks at his financial affairs. Jefferson was a Virginia planter. He owned slaves. He purchased more slaves. He had to tend to the needs of his slaves. He owned plantations with vast tracts of land. He had to purchase more land because the land wore out and could only be rejuvenated by allowing it to lie fallow usually for many years until it again became suitable for farming.

Jefferson was not the only Founder to warn of the evil of being in debt. Benjamin Franklin was noted for his frugal ways through "Poor Richard's Almanac". He was particularly concerned about those who borrowed in order to splurge. "But what madness must it be to run in debt for these superfluities....But, ah, think what you do when you run in debt; you give to another man power over your liberty". How many of us have every stopped to considered that? We simply went along with our credit cards, home equity loans and second mortgages wearing a stupid grin only to wake up and find ourselves in a financial mess.

Our first president was most concerned about debt, particularly the national debt and its effect on future generations. " No pecuniary consideration is more urgent then the regular redemption and discharge of the public debt; on none can a delay be more injurious, or an economy of time more valuable". Washington pleaded with the nation to get rid of the national debt as soon as possible so that it would not be a burden on future generations.

For the most part, the wish of the Founders was followed by those who came after them. We did not have the amount of money we have in circulation today until well into the 1960's. The greatest generation that grew up during the Great Depression and fought World War II was not a generation that went into great debt. Neither did our government. All of this changed as the children and grandchildren of this frugal group grew up with a hedonistic attitude and a willingness to satisfy the self. Thus new terms crept into our vocabulary. Credit cards and the debt associated with them. Lower or no down payments to purchase a home. Subprime mortgages could get you into a home. Adjustable Rates were really okay. On and on we went and then we woke up and had a terrible headache. Some are going to lose a home or a car. Others will lose their job. Some will lose all three.

Where are we going? There are those who say that there is a light at the end of the tunnel and we will get out of this quickly. Others are calling this market a bear market rally--not good. Some say the end is further then we think. We do know that we have but a small majority that still supports capitalism, the economic system the insures our freedom. We know that more are willing to live under socialism, a system that has never worked.
What is sad is that those great men we call the Founding Fathers laid out the entire path for us and appears that we that we might have blown it.