I have noted before that if one's household earns $60,000 annually, but spends $100,000, life is good — that cool vacation, a new car, that big screen TV, etc. The following year, if one's household earns $65,000, but spends $110,000, then more of the same. One simply borrows the difference.

The problem is that pesky request to begin paying back the formerly borrowed money, along with that annoying interest expense. This cycle can continue as long as one can find additional lenders and one can make requested payments on time. Unfortunately, this whole approach to "living beyond your means" comes home to roost when the lenders say no more, when the cost of the debt payments and interest payments finally overwhelm the household.

Welcome to Greece today … and possibly the United States tomorrow

What is true for the household is also true for a nation. Greece has been living beyond its financial means for years, with borrowed money making up the shortfall. The lenders and investors in Greek debt securities have finally said no more.

Brake set

The American economy is akin to an automobile moving down the highway. This vehicle actually has two gas pedals — one for fiscal stimulus (government spending) and one for monetary stimulus (money creation by the Federal Reserve). The multi-part brake pedal combines a list of concerns (or anxieties) impacting both businesses and consumers.

This "anxiety list" (detailed in an earlier column) includes such factors today as fears of a possible and temporary U.S. default on its more than $14,000,000,000,000 national debt and of whether government ever will get spending under control. It includes anxiety about volatile stock prices and declining housing values.

It also includes debt anxiety about Greece and other European nations and how that might impact us. Oil price volatility tied to developments in the Middle East and in northern Europe also impact our confidence level. In fact, consumer confidence, as measured by the Conference Board, fell to an eight-month low in June as reported Tuesday.

Never before has the American economy had two gas pedals pushed to the max, pushed to the floor, as now. U.S. government spending today is TWICE what it was 10 years ago. Of every dollar government spends, it borrows 41 cents, comparable to the household noted at the beginning of this piece.

The Federal Reserve has had its gas pedal to the floor for three years, with a tripling of assets on its balance sheet, all financed with newly created money.

The American economy is on stimulants, on steroids as never before. And yet we struggle, with economic growth at a weak 1.9 percent real (after inflation) annual rate in 2011's first quarter. Second quarter growth is expected to be only slightly better.

More talk has emerged of another down leg for the economy, another recession. One respected economist (yes, an oxymoron) noted in recent days his forecast of a 99 percent chance of another U.S. recession before the end of 2012. Ouch!

For now at least, the consensus view of forecasting economists sees U.S. economic growth at a 2 percent to 3 percent real annual rate over the next few quarters. Various economists note that some of the issues that slowed the economy in recent months, including the Japanese earthquake/tsunami/nuclear disasters that slowed U.S. auto production — as well as the upward surge in oil and gasoline prices — will prove temporary. Let's hope so.

Questioned theories

Still, exactly how can both gas pedals be maxed to the floor, with resultant soft U.S. economic performance during two years of economic recovery? The answer is a collective loss of confidence in national leadership. Business professionals and consumers are scared to death of government out of control.

They are largely scared to death of the president's health care program that will drive employer and worker costs higher and higher, while bringing government bureaucrats into the doctor/patient relationship more than ever before.

Smaller employers, the backbone of the American economy, know they are not likely to receive a waiver from the health plan requirements, something already granted by Health and Human Services Secretary Kathleen Sebelius to more than 1,400 companies, including McDonald's — companies that threatened to drop all employee health care coverage, according to The Wall Street Journal.

The president's and the Senate's application of Keynesian economics — more and more and more government stimulus (spending) — has fallen victim to anxiety about such spending, and massive new debt levels, never ending.

A McClatchy Newspapers-Marist poll released on June 27 noted only 37 percent of registered voters approve of the president's handling of the economy, his lowest rating ever. Voters disapprove of the president's handling of the federal budget deficit by two to one. At the same time, no major Republican candidate for president has yet caught fire with the voters.

Fed … take a break

The Federal Reserve's monetarist approach — the creation of massive amounts of new "money" to stimulate economic output — has been overwhelmed in some circles by longer-term inflation fears (including those preaching the ownership of gold), some major financial institutions which have greatly slowed lending and a general hesitancy on the part of borrowers to incur new debt.

The vast majority of forecasting economists are fearful that sluggish U.S. economic growth could lead the Fed to institute a third quantitative easing program, a fancy term to explain the creation of hundreds of billions of dollars in additional "money" to stimulate the economy. The current QE2 program of $600 billion in money creation to buy bonds ends this week. Fed critics would suggest that QE2 merely weakened the dollar and boosted inflation, resulting in higher oil and food costs for American consumers, while providing little in the way of economic stimulus.

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Most forecasting economists would prefer to see the Fed move to the sidelines. The Fed could then make it clear that no major moves in monetary policy will be considered unless and until the administration and the Congress reach a viable agreement to increase the debt ceiling and take the first credible steps toward longer-term deficit containment.

The crossroads

This nation is approaching a crossroads. We can get a firm handle on future government spending and bring annual budget deficits back to affordable levels. Or we can continue on the current path to financial ruin, face another self-induced financial crisis and deal with the same external control and external finance issues now being faced by Greece, by Ireland, and by Portugal.

Just rambling.

Jeff Thredgold is the chief economist for Zions Bank and founder of Thredgold Economic Associates, a professional speaking and economic consulting firm. Visit www.thredgold.com.