Wednesday, November 21, 2012

Wimpy Economics

"I'll gladly pay you Tuesday for a hamburger today." ~ Wimpy, a character in Popeye cartoons.

Popeye cartoons were one of my favorite shows when I was a child.  Besides the main characters of Popeye, Brutus and Olive Oyl, there was a character name Wimpy whose famous line was, "I'll gladly pay you Tuesday for a hamburger today."  Even as though I was a six year old, I understood the humor in Wimpy's request, especially since he said the line with every appearance.

Little did I realize that Wimpy's view of paying for goods would become the norm.  Here are some examples of Wimpy economics today:
  1. Credit cards.  "I'll gladly pay you next month for a purchase today."   I rarely use cash nowadays, even for a one dollar purchase.   That way I don't have to deal with change in my pocket or worry about having money.   And I can pay the bill the following month.
  2. College education. "I'll gladly pay you after I graduate for an education today."   Borrowing to go to college is the norm, is encouraged, and is subsidized by the Federal government.  Unfortunately, some students borrow too much and can't afford to pay back the loan.
  3. Government financing. "I'll gladly cut spending in the future for a if you give me more money today."   I betting the fiscal cliff negotiations will offer this approach.   Of course, I am skeptical of the promise. As Ronald Reagan once noted, "Government programs, once launched, never disappear." 
Unfortunately, Wimpy economics is not sustainable.  While the issues are masked in an expanding economy, an extended economic down turn will show the flaws of such an approach.

For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2012 Achievement Catalyst, LLC

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