A few weeks ago, now former McCain top economic adviser Phil Gramm got into all sorts of trouble, ultimately having to step down from his position, for saying that America is in a mental recession and that we are a nation of whiners. Oddly enough, I agree. I think the fact that we are in a mental recession is a huge reason why John McCain should not be elected president. Let me explain:
For those who do not know, our economy is not based on the gold standard, the silver standard, or any other standard. Our money is backed by the “Good faith of the American Government.” Which means that when people lose faith in the American Government (President with a 25% approval rating, congress lingering in the low teens) the economy tanks. (Borrowing $600 billion dollars from China doesn’t help either.)
Our economy is also based (quite a lot) on debt. When Americans borrow money from a bank, the bank isn’t loaning money that they have, they’re conjuring money into existence because our government allows banks to give bank credits in American currency. Thus every time a loan is granted, the American economy grows. If people are afraid that they will not be able to pay back their debts, or are afraid for their jobs, they don’t take out loans, or worse yet start defaulting on their loans. When people are unable to pay back their debts, the Economy shrinks dramatically. So in order for our economy to remain strong, people need to feel confident enough in their future to take out loans. So who would be better able to restore trust in the government and restore the people’s faith? The only cure for a mental recession is something that McCain openly scoffs at: Hope.