The American Debt Crisis
I am very pleased to say that I am not an economist. Here is my take on the American Debt Crisis, through the eyes of a poor card player.
I have just come back from my holiday in Portugal. ( Great, thanks ). My ten year old son has just found a passion for blackjack and so we took some coloured pocker chips and a pack of cards for some family games in the evenings. Whilst playing absent mindedly one day, I found myself down from 25 red chips to just 10 chips. ‘Ok, ‘ I thought, ‘ I need to get a grip on this.’
So I started to try harder but, because I hadn’t really been concentrating before, I found it really difficult to get back up to speed. Also, for some ridiculous reason, I became fixated on getting my red chips back. If they had all been the same colour, I am sure it wouldn’t have mattered, but I realised that the rest of my family were actually playing with my red chips. I was supplying their reserve currency. I became desperate to get my money out of their hands and back into my pile. That became my main motivation and so my decisions became more and more erratic. I couldn’t be happy to build up slowly. I was putting 3 or 4 chips on a ten, just in the hope that I would strike lucky and claw back some of my red chips. Sometimes I won, but gradually my stocks diminished and I got busted out. My penalty was having to do the washing up.
When the chips are down…
It struck me, as I rinsed the plates, that the American economy is in a similar fix. The world is awash with dollars, but America doesn’t own them. The USA supplies and supports a currency which, in many cases, is actively being used against it. Due to decades of poor management at home, the invincible greenback has become a shadow of its former self. Like a giant blimp, it appears to the outside world as big and robust as ever, but there is nothing supporting it inside except gas. And it is leaking.
The danger is that, as America tries to recover, successive governments will act erratically, cutting in the wrong places and trying for a big win on a nine or a ten. They might well appear to be succeeding for a little while, but if you ignore your core skills and try to get out of a hole on sheer luck, you are bound ultimately to fail. And this will have a much bigger impact than just having to do the washing up.