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More Government to Protect Us From Ourselves

The opinions expressed by columnists are their own and do not necessarily represent the views of

Putting more and more wolves in charge of guarding the henhouse might characterize the big problems we’ve now created for ourselves.

Government is growing. The private economy is shrinking. Those wielding political power see fewer and fewer problems they believe private citizens can solve on our own. Soon, each one of us will have our own personal guardian bureaucrat.

The real difference between us and the hens is that the hens are not paying for the wolves’ salaries and benefits.

This past week new rules governing our credit cards kicked in, following passage of the Credit Card Accountability and Responsibility Act, signed into law last year.

The point of the CARD Act is to protect us consumers from the scheming bankers from whom we get our credit cards.

As result of these new protections, consumers can be grateful that credit card interest rates are the only interest rates that are not now dropping. According to the Wall Street Journal, the average card interest rate is now 1.6% higher than last year and the gap between credit card rates and the prime lending interest rate is the highest it’s been in 22 years.

More good news for consumers is that there is less credit available. The average credit limit on new cards being issued is down 11% from last year.

And, because the CARD Act implements new rules limiting the flexibility that banks have, for example, in changing rates on balances of overdue accounts or on exceeding credit limits, banks are simply finding new ways to raise revenue.

Over the last year median annual fees on cards increased 18% and median fees on cash advances increased 33%.

It’s hard for our politicians, who are busy spending our money and raising our taxes so we can pay them to protect us, to grasp that there is a private economy in our country with private businesses that earn their living serving consumers. And that when regulators start telling them what to do, businesses must find alternative ways to provide their services and earn a living or shut down.

Equally hard for politicians to grasp is that if our private economy is left free, it’s competitive. So if consumers are not getting a good deal, and there is a better deal to be had, a competitor will step in and offer it. Nor can power loving politicians fathom that, except in the case of our new health care law, in which government will force private citizens to buy government defined health insurance, citizen consumers are free to do and buy what they like.

There are no penalties or interest payments for credit card holders who pay their bills on time. So those allegedly getting protection by these new rules are those who choose not to. Those who do pay on time now will pay higher fees to finance these new protections. And, it will be harder to get cards, which will hurt low income families that liberals supposedly care so much about.

There’s even more good news in store for those who think freedom is the root cause of our financial problems.

Soon we will have the Bureau of Consumer Financial Protection in place, as result of the Dodd-Frank financial regulation bill just signed into law. The new bureau was set up in about 400 pages of the several thousand page bill, and, with a $500 million dollar budget and several thousand employees, will protect us in every other aspect of our financial lives.

It’s good that our politicians are getting our financial affairs in order for us.

Proof that we can rely on them is that our government debt is now almost 60% of our GDP and projected to reach 100% by 2020. Standard & Poor’s has just indicated that the AAA rating of US government bonds may have to be reduced, showing that the United States is now a credit risk.

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