Financial Opinion and Insights

Archive for August 2012

We’ve Been Here Before!

IFG BlogIf you’re wondering – and you probably aren’t, and rightly so – why nothing is being done in Washington, it’s because it’s election time; but, most people don’t pay much attention during the summer months because, unlike politicians, they actually have lives.

The news media knows this, too.  That’s why news coverage is about gaffs rather than real issues.

“There comes a time to put principle aside and do what’s right.”

                       (anonymous congressman, most are)

Conventional wisdom says that most people won’t begin paying attention until after Labor Day, which means ‘conventional wisdom’ assumes most Americans can afford to take vacations and doesn’t mind unemployment.

“These are not my figures I’m quoting. They’re from someone who knows what he’s talking about.”

     (anonymous congressman during a debate)

Of course, the current spending debate isn’t new.   Much as we’re accessing capital from China today, we were doing much the same thing as far back as the 1830s, still dependent on British capital despite the Revolutionary War and the War of 1812.  Back then, while foreign capital was used in an attempt to stimulate economic development, interruptions in the availability of credit during times of uncertainty often had ruinous consequences for American borrowers.[1]  The inflow of foreign capital, combined with the expansion of the paper money supply drove up prices making American products less desirable on the foreign market.  At the same time, the profligate spending of several states left them deeply in debt.  This was also a time when Americans felt uneasy about the international banking system – a machine that few Americans only dimly understood.[2]  By the time Andrew Jackson left office in 1837, Eastern cities were experiencing bank failures and factory closings, making the U.S. dependence on foreign capital more apparent than ever. 

We’ve been here before.

“We’ll burn that bridge when we get to it.”


Jim Lorenzen, CFP®, AIF®


Jim Lorenzen, CFP®, AIF®Jim Lorenzen is a Certified Financial Planner® and An Accredited Investment Fiduciary® in his 21st year of private practice as Founding Principal of The Independent Financial Group, a fee-only registered investment advisor with clients located in New York, Florida, and California.  IFG does not sell products, earn commissions, or accept any third-party compensation or incentives of any description.  Nothing contained in this material is intended to constitute legal, tax, securities, or investment advice, nor an opinion regarding the appropriateness of any investment to the individual reader.  The general information provided should not be acted upon without obtaining specific legal, tax, and investment advice from an appropriate licensed professional. 

Additional IFG Links:

[1] Unfinished Revolution, Sam W. Hayes, University of Virginia Press, 2010

[2] ibid

Written by Jim Lorenzen, CFP®, AIF®

August 7, 2012 at 8:11 am