Debt: The New Financial Painkiller

Since the early 1970s, American attitudes towards debt have dramatically shifted. We progressively morphed from a culture that avoided debt, to one that accepted debt but managed it with a healthy fear, to one completely maxed out on debt. Now we have an entirely new phenomenon—a culture that uses even more debt to dull the pain of the debt we already have.

The charts below reflecting federal and consumer debt can be roughly divided into four phases that clearly show we are living in a dangerous economic stupor, not unlike that of a drug addict who uses more and more drugs to dull the pain.

Phase I – Debt Avoidance (1940 – 1975)
Phase II
– Acceptance with Healthy Fear (1975 – 1990)
Phase III – Maxing Out on Debt (1990 – 2008)
Phase IV – Debt Used As Painkiller (2008 – Present)

The critical Debt as Painkiller Phase began at the federal level in 2008 when our elected leaders convinced us that it was better to avoid the pain of the collapsing housing bubble—itself the result of excessive spending and borrowing. That ushered in the Troubled Asset Relief Program (TARP) by which the federal government bailed out everything from banks to insurance companies and auto manufacturers. The Federal Reserve had its version of Debt as Painkiller as well called Quantitative Easing or QE I and II—basically creating money out of thin air.

We as individuals, families and college students had already gone on a debt binge, buying on credit everything from college degrees to houses, cars, the latest gadgets and even Netflix subscriptions until 2008 when we all began to feel the pain.

Many then began to cry out for help from the government to modify our mortgages, increase welfare, reshape our student loans and overhaul the consumer credit industry. Others became angry that the “1%”—our wealthy citizens—were “not paying their fair share in taxes” that would enable more government bailouts and handouts to kill the pain.

“Give me the relief I need now no matter what it costs down the road!” is the financial fix being demanded by the debt addicts. Those who want to be anesthetized by the government’s out of control, debt-fueled spending even now refuse to look at the dire implications of our “drug of choice.”

It reminds me of a joke told by an anesthesiologist friend. “I’ll put anyone to sleep for free; I only charge for waking you up.” We’re asleep now, but the costs of this pain avoidance will most certainly have to be paid when we wake up.

CNBC’s Larry Kudlow interviewed U.S. Sen. Tom Coburn (R-Okla.) on his show this week. His questions garnered a seldom-expressed admission of the very real danger of living in Phase IV:

“But the real question is: What is the greatest threat to our national security, is it al Qaeda or is it our debt? And I would proffer that it’s our debt. In terms of the thing that will take this country down, it’s not al Qaeda. It is spending money that we don’t have on things we don’t need and creating a debt that will totally shackle our children,” said Sen. Coburn.

I agree with him; we are flat on our backs, ignoring a threat as deadly as the most radical terrorists and we must wake up from our stupor now.

Are you struggling with financial issues of your own? We can help you with your financial challenges, your career or your business issues. Learn more at crown.org.

Your comments are always welcome. Comment below.

Chuck Bentley

P.S. Last month, Dr. David Jeremiah, promoted my book, The S.A.L.T. Plan, How to Prepare for an Economic Crisis of Biblical Proportions. Since its release in December of 2011, over 35,000 copies have been distributed. It makes an excellent gift for college graduates.

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8 Responses to Debt: The New Financial Painkiller

  1. Amen Chuck! I was there in the middle of all that until 2007, I got on a plan, cranked up my will power and prayer power and was out of debt by 2011 when I was able to retire. I am 67 years old and shudder to think of my life had I not taken those steps. I would be 67 with debt and trying to work the 40 plus hours with all the heavy stress that I had before. Now I live simply, but am free to enjoy friends and lots of volunteer work!

  2. Mike says:

    Chuck, the issue with the wealthiest 2% is, for the past 30+ years their salaries have sky rocketed through the roof while middle class incomes stagnated. YET those wealthiest 2%ers got more and more tax breaks so they haven’t been paying their fair and reasonable share of tax as the middle class has been doing. Now conservatives what to balance the budget on the backs of the middle class and elderly while continuing to give the wealthiest 2% even more tax breaks. THAT’s not fair nor reasonable.

    Before someone replies and says, those wealthiest 2% are job creators, my question would be if that is the case where are all those jobs those folks have been creating from 2000-2012? Answer: Overseas and in Mexico, etc. The only real American jobs to be created during the past 12 years have been jobs for illegal immigrants, who work for slave wages far below the minimum wage.

    So essentially those 2%er’s have been getting a tax break and have not been producing jobs in America for LEGAL Americans. I have no problem giving a tax break for someone who creates American jobs for legal Americans IN America, NOT overseas or Mexico.

    I believe that deduction for job creation should not be automatic. It instead should work like the charitable deduction works. Each year you have to make charitable deductions in order to get the tax break, so why not do the same for the job creation tax break. To get that tax break, you need to create jobs in America for legal Americans in that given tax year. If the following year, you don’t create any NEW jobs, then you don’t get the tax break. THAT would give some real incentive to our employers to start creating real jobs in America FOR legal Americans.

    As far as the debt goes, neither GOP or DEMS seem to know what they are doing. The GOP wants to cut important things that actually benefit real people while giving those wealthiest 2% even more tax breaks. The DEMS, on the other hand, don’t want to cut anything and simply raise taxes. We need to be somewhere in the middle where un-necessary programs get cut first, why is it the ONLY programs the GOP wants to cut is the one’s who benefit the little guy or the elderly.

    Why NOT start cutting the other stuff first and let’s see how much we can start saving first by doing that. For example: cut funding to PBS and NPR ( I listen to NPR, but don’t believe it should be funded by tax dollars); cut out all foreign aid to all countries we can’t afford to do that anymore – American citizen’s needs should come before giving money away to other nations. Allow tax breaks to farmers and corporations who send food and health supplies, etc, to foreign nations, also allow the churches to do more in sending food aid, etc. Maybe increase the tax break to citizens who give money to agencies who send food, etc, overseas. As corporate America made drastic cuts to its work force during this recession, why not the Federal government cutting the workers in government. There are plenty of buildings full of “pencil pushers” who don’t really add value to the final product you and I receive from the government, so cut back that work force by 10-20%. Cut out ANY and ALL tax breaks to the oil companies. Change the laws so corporations like GE can’t make 2 Billion dollars in PROFIT and pay NO Tax. Change the laws so people like Mitt Romney can’t send his money to an offshore investment and pay no tax. Taxes on investments should be the same as taxes earned by working a job. Cut staffs of folks in Congress by half. No limos unless the Senator or Congressperson pays for it out of their pocket, etc, etc. We have apparently almost 1000 military bases around the world. Cut out 3/4ths of those. It’s time for those nations to start defending themselves. IF Israel wants to fight a war with Iran over the nukes. We should be willing to SELL them any equipment, planes, bombs, etc, they need, but provide no military. That way it’s THEIR people who’ll get killed and they take on the debt of that war.

    These are just a few examples of how to cut debt and raise revenue. THEN after doing all that and much more, we’ll be able to see some major improvement in our bottom line. We’ll also see how much more needs to be done. THEN AFTER all that, when the government finally says we still need to cut some programs that benefit people, at least THEN we’ll be able to say that the government cut the other stuff already rather than what gets proposed today of lets cut the people’s stuff FIRST. NO, it’s time for the cuts to come from the other direction as I laid out first, then AFTER all that has been exhausted, THEN come after stuff that benfits the people. The government will get far more buy in to that program than the usual of sticking it to the people first, second, and third.

  3. Pieter Versluis says:

    That money talks I’ll not deny.
    I heard it once, it said “Good-bye”.
    -Richard Simmons

    Sign in the window of a store: “Use our new easy credit plan – 100% down, nothing to pay each month.”
    [TSQB]

    Some Christians are now so commercialized, that it is no more Moses and the prophets but Moses and the profits.
    [H.S,BTB,65]

    Be careful of this kind of love. The LOVE of money, is the root of all evil.

  4. Mark says:

    Chuck,

    The se are clearly symptoms of leaving God and his word out of our culture. Our current problems are rooted in the belief that “WE” not God can solve the problem. The prior gentlman has some interesting comments but I disagree with his logic. He believes the answer is more regulations and government control – top down “salvation” – where the government and congressmen/women will bring the solution. This will lead to tyranny – as we see our nation already moving this way – significantly with government czars and illegal government medicine etc.

    I believe the answer will come from the Bottom-up, grass roots efforts beginning with the repentance of Christians, returning to our God and away from trust in money and “our efforts”. Begin praying, reading Gods word and live doing the works of our God as stated in the scripture. We the “Christian culture” have hidden in the shadows, cowering from taking the power and strength of almighty God out to our needy nation. Willingly standing by “holding the coats” while humanism and godless antichrists wreak havoc “stoning” and trampling the Biblical principles that founded our country (recall Paul at the stoning of righteous Steven). Where not the words of Christ as he spoke to the proud, scripture knowing “Religeous right” of his day (pharisees, sadducees and zealots & priests)- basically to Repent and do justice /justly.

    The answers to the problems are available if we return to the truth God has given us – live and obey in fellowship with him then act in love and justice to our fellow man. If we will, like the Isrealites of old, fall on our knees and repent of our idolotry and whoring after “other gods” He, Our God will intervene and heal our land and the glory will go to him. I will leave this question:

    Why should God allow America to continue to exist as a free nation and not continue into socialism and tyranny, on our present humanistic course?

  5. Leroy Zumack says:

    I appreciate the succinct analysis of our nation’s debt. I would only wish to add that having the rich pay slightly more is not anti- American or anti- capitalist. Those that earn millions 9 a small (minority)could also pay their workers more. As Mr Buffett and Bill Gates offering to pay more, the Senate voted down the bill to increase their participation. I am not for soaking the rich, or making them poor, but have them pay slightly more. Is that so much to ask?

    • Terry says:

      Our national debt crisis did not start with the current administration. It start with trickle down economics under Reagan. Even your graphs shows the debt excellerating under republican Geo. W. Bush with his two tax cuts (decreasing revenue) and entering two unfunded wars (excellerating expenses). The progressive movement is seeking restoration of fairness in our tax system.

      I sometimes wonder if present day christian authors are fund by Carl Rowe. At least the Catholic preists use to protest inequities in Central America and stand for injustice. I have friends really believe that a progressive liberal cannot be a christian….really. WWJD…vote republican!

    • Terry says:

      here here…

  6. Michael says:

    Bro. Chuck,

    If you have access to the Wall Street Journal, I would be VERY interested in hearing your thoughts on the following article that was published today: The 2013 Fiscal Cliff Could Crush Stocks
    By Donald L. Luskin.

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