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What can this economy teach us?

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By Larry Rowell

Economists agree — banks have too much debt and we, dear Americans, also have too much individual debt.

In 2008, 25 banks failed in the United States. In just two months this year, 16 banks have failed.

I heard on National Public Radio last week that Americans now owe $13 trillion on mortgages and credit cards and that’s as much as the country’s GDP, or Gross Domestic Product.

The GDP is a measurement of the output of goods and services in the country — a picture of the total U.S. economy.

The scary thing, according to Columbia Business School professor David Beim, is our debt now equals our output.

And he said that has only happened one other time in the history of our country — 1929, the beginning of the Great Depression.

For most of America’s history, our debt level was at 50 percent of GDP. It reached 100 percent from 2000 to 2008 when Americans were living large, mostly on credit.

How did we get to the point where we have quit saving money and started plopping out the plastic to buy things we don’t need with money we don’t have to impress people we don’t even know?

One of the greatest transferences of wealth in this country occurred within the last 20 years when baby boomers, born from 1946 to 1964, inherited an estimated $30 trillion from their World War II parents.

What happened to all that money? Did boomers pay off mortgages, car and credit card loans?

Evidently not. The percentage of boomers saving money declined during the past 10 years.

Tom Brokaw called the World War II generation “The Greatest Generation.” This was partly because the men and women who came home from the war were content to purchase and live in houses that averaged 1,200 square feet.

They also saved for many purchases instead of running out and buying everything on credit.

My grandmother, who lived from 1889 to 1979, never owned a credit card nor had any consumer debt She lived on a modest pension and a monthly Social Security check.

And her house? Just under 1,000 square feet.

The “GG” remembered the days of having no employment, living on what you produced in a garden and saving anything you could for a rainy day.

What can this economic downturn teach us in 2009?

First and foremost, to learn to live on what we make.

Second, we need to rediscover happiness in faith, family and friends and to be content with what we have, not what we “think we deserve.”

Third, accept responsibility for the debt we have and pay it off.

No matter what, though, this is going to be a long and painful process for our nation and no amount of government stimulus funding will solve our greed and desire for prosperity purchased on credit.

Only we can change that.

Larry Rowell is a staff writer for the Casey County News in Liberty, Ky.