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How good credit trumps thrift as all-American virtue (2)

(Shanghai Daily)

08:31, August 15, 2011

The development of credit cards was another milestone.

Access to credit acquired political and moral connotations.

To be denied credit was more than an economic inconvenience, it was a statement about one's personal and social worth. Being credit worth is part and parcel of what it meant and still means to be an affluent, responsible adult.

"Children's Spending," a guidebook published in 1971, advised parents who were befuddled on how to deal with a deviant thrifty child who "hoard[ed] money and refuse[ed] to spend it for the things he want[ed]" on ways to reeducate their child by setting up a "realistic payment schedule."

These developments, according to Hyman, suggest that "being "good" and maintaining a good credit rating had become synonymous, and certainly more virtuous than saving."

Credit rating became an measure of trustworthiness and is used in so many other aspects of life, that it would be impossible to participate in mainstream American life without it. Many employers today run credit checks on job applicants as part of the screening process.

"In an effort to end credit discrimination and give more Americans the opportunity to enjoy consumer prosperity, liberal politicians remade the legal context of indebtedness," the book observes. In other words, credit access has become a right, rather than a privilege.

Emulated

In the face of deindustrialization, declining real wages, a widening wealth gap, and globalized trade, American indebtedness has become a threat to global security.

"While a generation of postwar consumers could safely borrow against rising incomes, the promise on which American prosperity had been built now cracked," the author explains.

Instead of addressing its fatal dependence on credit, the US government is doing its utmost to "sustain" the economy by spending more.

Not long ago some Chinese policy makers were still talking glowingly of the nation's astronomical dollar reserves. Given the downgrading of US credit ratings, this treasure is increasingly viewed with misgivings.

Ironically, China's act of generosity is not received with gratitude.

As early as 2008, when the crisis occurred, some American politicians had blamed the crisis on China's trade imbalances, high savings and its readiness to lend to the US.

And such is the magic of globalization that China's only solution seems to continue to lend liberally to the US to keep it afloat, to create jobs, and to sustain high growth.

The Chinese policy makers find themselves in this dilemma because they have abandoned their time-honored traditional values, and have prostrated themselves before the false gods of market and globalization.

As researcher Zhong Xiangcai commented in the Wenhui Daily on August 11, the now dominant Keynesian economics is centered on monetary and fiscal policy, and views full employment and stimulation of demand as central to economic prosperity. Keynes believed that consumption, even on borrowed money, can lead to more wealth.

Thus, inducing inflation and deficit spending become a chief means to lift the economy out of recession.

The superstition in economic metrics led to the cult of growth, to the exclusion of all other human values.

【1】 【2】

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