Economic Commentary. Because I am confused.

So earlier this morning, I get this breaking news alert from CNN:

Treasury Secretary Paulson says "hundreds of billions" of dollars are needed to resolve U.S. financial crisis.

I can't get my head around our giant ass economy. Here are the things I do understand:
  • Our national debt is about $9.6 trillion.
  • Part of the economic crisis is that a lot of people in the US borrowed a lot of money they could not afford to pay back.
  • When people borrow money they can not pay back, that means they are in debt.
So tell me if I've got this straight:

PROBLEM: Too many people in the US in debt up to their eyeballs.
SOLUTION: Make US government in debt up to the top of its head.

Boy, I tell ya, the government is setting a GREAT example to all the citizens that got us into this mess.

I also saw on the news last night that we are going to loan a boatload of cash to a few countries--like, hundreds of billions or something? (Don't quote me on that figure.) And here is what I know about that:
  • We as a country have almost $10 trillion in debt.
  • If you're in debt, that means you don't have any positive cash flow to pay your debt off.
  • We are loaning (or planning to loan) money to other countries.
What in the hell?

PROBLEM: US has so much debt it can't pay its own bills.
SOLUTION: US gives money to other countries.

This is why I got a D+ in Macro Economics in college. Because this crap makes absolutely NO SENSE.

Anyone with a firm grasp of how any of this actually works, please, do share. But in layman's terms, because economic mumbo jumbo will go straight over my head.


nikole said...

I am right there with you in the confused boat.

Cassandra said...

now, add in all the crap about inflation, federal regulation of interest rates and the depreciation of the American dollar and then we can have our own wing at Central State.