A Parable On Why You Should Never, Ever Lend Me Money
I went back to the bank to see if they would lend me some money. Armed myself with employment records and bank statements going back 50 years.
The bank manager wasn’t happy to see me again but perked up a bit when I showed him all the documents. I was here to prove I’m a worthy credit risk.
He was very complimentary that I had been earning a regular income for every one of those 50 years and, except for a few blips along the way, had grown my income year to year.
Then he started to frown.
“You regularly spend a lot more than you earn. About 20% a year on average. And recent years look worse – last five years you spent 60%, 57%, 44%, 25% and 16% more than you earned.”
“In fact, over the last 50 years, there are only four years where you saved money.”
The bank manager thought maybe the future would be better. He asked to see my revenue and spending projections for the next five years.
I showed him: every year I was planning to spend 15% more than I earned.
My loan was disapproved.
Would you say yes?
But here’s the appalling truth: you may have already lent me money. Or at least, lent cash to a deadbeat with the exact same finances.
That’s the U.S. government. Which since 1970 has run budget deficits in 46 of 50 years and only managed a surplus 4 times. If you don’t believe me go to the White House website and look for yourself. The link is here: https://www.whitehouse.gov/omb/budget/Historicals.
Today, the U.S. has almost $23 trillion in debt -- expected to grow to $28.5 trillion by 2025. And people keep lending – hoping they’ll get this cash back.
The bank manager couldn’t see that happening. Can you?