The $41 Dollar Cake - An Expensive Lesson in Economics

The world economy will be discussed today at Camp David as leaders of the Group of Eight will meet at Camp David, hosted by President Obama. 

We have been following the progress of the Greek debt problem within the Eurozone and its implications for the region. Germany is intent on holding firm on its position that austerity and belt-tightening steps are the proper prescription for its neighbors. Since Germany through its economy and direct aid is footing the bill for the Euro bailouts its seem that what its leaders say is the final word. Germany seems intent on holding a firm hand and demanding nations like Greece begin to live within realistic budgets. 

I was intrigued by an article this morning in the Wall Street Journal that told the story of a $41 dollar cake purchased in an upscale grocery store by a lady with food stamps. The author of the article witnessed the transaction and wondered what such a display of profligate spending taught to the young child of the lady. Such a price for a cake that could have been baked at home with a few dollars of ingredients, and purchased by someone who obviously cannot afford that expensive of a cake, illustrates the economic problems of not only many nations but individuals as well. It comes down to a simple key–we must live within our means.

The article concluded with the wisdom of the author's grandmother... 

"Never spend more than you earn, and always put something back for a rainy day."

This one step would save everyone, and any nation, from the burden of excessive debt. 

This is the season for commencement speeches. Graduates of our nations colleges go out into the real world of work. This sage fiscal advice from a wise lady, who likely learned what she did the hard way, will serve graduates, and all of us, quite well.