If you have ever bought a house, you probably have experienced what I think of as imaginary prosperity.
You get the mortgage, you sign all the papers, and you realize that you have just spent hundreds of thousands of dollars. And suddenly, lesser expenses seem like nothing. So you happily buy a new couch, carpeting, major appliances, and various other additions to the house, secure in the knowledge that while you are spending thousands on all of these things, that money is nothing compared to what you’ve just shelled out for the house itself. You spend money that you might not spend under other circumstances, and all because you are already spending so much anyway.
That’s a dangerous financial place to be in. After all, you don’t really have all that extra money. Quite the contrary! But still you spend, and all because you figure hey, what’s another thousand or two when you’re already spending hundreds of thousands anyway.
And that’s where the US government is right now. We’ve put $700 billion into the financial bailout. We’re getting ready to pass an $800 billion stimulus bill. And right now, in the midst of an economic crisis, we are deeply mired in imaginary prosperity. After all, what’s another couple hundred billion dollars, what with all the other money pouring out of the treasury?
Now don’t get me wrong. I think we need the stimulus, and I think we needed the bailout.
But I am worried about how we’re going to find fiscal discipline again. Because we’re going to have to.