Opinions Expressed in "Rants," while informed by Catholic doctrine, are merely the opinions of the author.
The Love of Credit Cards if the Root of All Evil
Most of us have heard St. Paul’s warning, “the love of money is the root of all evil.” (1 Tim 6:10) St. Paul had never heard of credit cards.
Our economy appears to be collapsing. Why? Well, I don’t pretend to understand all the socio-economic factors leading to its demise – but what I’ve managed to pick up from hours of CNN, McLaughlin, and the Daily Show, is that it has something to do with credit abuse.
See, in the old days, if I wanted a new car, say a new Hyundai Pony, from Mr. Car-guy, how do I get it? I SAVE UP MY MONEY and buy it. But now we have a credit system, where I might not be able to afford the car now, but over time I should be able to get the money for it, so Mr. Bank-man loans me the money – that way, I don’t have to wait; I can have it right now.
Now if Mr. Bank-man is smart, he’s going to look at my credit history, i.e. my record of paying off debts from the past, and he’s going to look at my income, to see if he can anticipate getting his money back in the future, and he’s going to do this BEFORE loaning me the money. If I am smart, I’m going to make sure I will be able to pay it off in the future before I borrow it.
But say he’s not smart, and a little greedy – so he decides to forgo the investigation into my debt repayment ability, and instead charge me a higher interest rate. I want my car now, so I agree.
So in the process of paying off my new car, guess what happens? A new quad comes out on the market. Ooooh, I’ve always wanted a new quad. And a new MacBook Pro G5. And a new i-pod. And a new air-conditioned dog house for Nemo. So instead of paying off more of my debt, I just pay the minimum payment, and buy more cool stuff, and save NO money.
But wait a minute, you might say. When is all of this stuff ever going to get paid for? Who knows. Who cares. I’m spending money at a greater rate than I can ever anticipate making it. But that’s okay right?
Meanwhile, because people are willing to pay more for their cars – because they can still have them anyway, all they have to do is put it on credit – Mr. Car-guy raises the price of cars up, up, up, up, as high as he can while people will still buy them – they become way more expensive than their actually WORTH. And since Mr. Car-guy is making so much money, his employees start demanding super-huge medical plans and retirement plans, which if Mr. Car-guy were selling his cars at a fair price, he couldn’t afford, but he isn't, so he can.
And these trends keep going and going and going until finally – POP – the bubble bursts. Suddenly Mr. Investor, who invests in Mr. Bank-man, does the math and realizes that Mr. Bank-man is never getting his money back, because THAT MONEY DOESN’T EXIST, so he sells his stock in Mr. Bank-man.
Mr. Bank-man then realizes his screw up, so in order not to lose more Mr. Investors, he either changes the payment schedule on me, increases my minimum payment, or forecloses on me and takes all my cool stuff away.
But he can’t, because I don’t have ANYTHING of value, except the car that is, which is now unsellable because it isn’t worth what I paid for it in the first place, because the price was artificially inflated by the car company – so Mr. Bankman goes out of business.
Meanwhile, now that Mr. Bank-man is out of business, no one can borrow money to buy cars from Mr. Car-guy anymore, so the price of cars has to go down, down, down, to what the cars are actually worth – only problem is, Mr. Car-guy has all these medical and pension plans to pay for, which he now can’t, so now he’s out of business too.
And all the dominos fall.
The solution to the problem, as it has been put forward so far by U.S. government officials, is create EVEN MORE MONEY that doesn’t exist, which means that all the money together is worth less than it was before, and to hope that people like you and me will spend more money so that the economy will be stimulated again.
Yea right – all that will do is delay the inevitable. We can’t spend money that we don’t have – money that we’ll NEVER have. We can’t have people buying more and more on credit cards, paying the minimum payments every month, with no idea how they’ll ever be able to fully pay off their debts, and not really caring anyway.
What we’re seeing right now on the news – I’m convinced – is that our economy is hitting the reset button – everything that has been artificially inflated in our economy is coming down, finally. It has to happen – it will be painful, but it has to happen, in order for the economy to get healthy again.
So throwing fake money into the economy, encouraging us to SPEND, to be CONSUMERS – this might delay the pain we will suffer in the short term – but it will only make it even MORE painful and drastic in the long term.
If we really want to fix the problem, its going to be by ceasing to be a society who’s economy is fuelled on consumption and immediate gratification. We need to start producing. We need to start saving money. We need to GROW UP.
There are people out there, stock brokers, bankers, car manufacturers, etc., I’m sure all praying to Jesus to save us from our economic whoas. I have a feeling Jesus is already answering that prayer, as we speak.
And one more thing: PAY OFF YOUR CREDIT CARDS!!