David Hines
Credit where it's due
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By David Hines
April 1, 2009

Credit's a good thing, isn't it? You get credit for doing good things.

When your bank credits your account, you have more money. But to the bank, the credit is a liability. A debit — taking money from you — provides more money to the bank. By accounting rules, a credit to the bank is a debit to you, and vice versa.

Double-entry bookkeeping has been considered a major innovation of the Renaissance. Like many such "innovations," it's a re-discovery. It has its roots in Classical times. Romans and Greeks had applied such a system, at least in a rudimentary form.

Today, it seems, it is considered not so much an innovation as one of those atavistic relics we can forget about. The new-style accounting is so much more attractive.

I'll give you credit if you know that for every credit there must be a debit. Most of our politicians don't, nor do a great many of the people who listen to them.

We're told that there's a credit crunch. It follows that there's also a debt crunch. The latter, we knew already. What we're told is that it must be fixed by extending more credit, thereby extending more debt.

But didn't the problems come about because there was too much debt not being repaid? Sure. So the plan is to fix it by incurring more debt that can never be repaid. Repayment is not even contemplated. Why consider something that is impossible? Government spending is gearing up to be the equivalent of the GNP. If it were to be repaid, none of us could afford even food.

What wonderful accountants we have in DC! They can create credits without corresponding debits. They perform this magic by merely neglecting to complete the accounting entries. They tell you that under their plan you'll get credit enough to make you rich, and it will cost you nothing. The multiplier effect, they say, will take care of everything.

This is the logical development of a system that creates money from nothing. Zero plus zero, or subtracted from zero, or multiplied by zero, still equals zero. In this sense, their accounting is still valid.

Of course, if you divide by zero, you get, "illegal operation; process aborted." And that's where we're headed.

I have to give them credit, and debit, for sheer stupidity.

© David Hines

 

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David Hines

Born in a mill town, David Hines has seen work as a furniture mover, computer programmer/analyst, and professional musician... (more)

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