Reuters and Seekingalpha .com blogger, Rolfe Winkler  reflects a worrisome trend in financial negativism.  Winker dances around the edge of the volcano in his latest piece.  He argues "....growth in spending... is no longer possible without incremental borrowing. We’ve gotten ourselves into a cycle of perpetual borrowing to, in Schroeder’s words, “pump the economy back to a high-water mark that was phony to begin with.” This makes two assumptions we are at the top of a credit cycle and that all borrowing is the same.  When did we Americans become so afraid of making smart investments for our future?

We certainly seem to be at the top of a grand American consumer driven credit cycle. People don't have access to the easy money of the Bush bubble years and the ATM house has been foreclosed upon. The goal then for the banking regulators is to engineer an orderly contraction of price and credit so the system doesn't implode and wipe us all out.

The second issue is that all borrowing isn't the same.   If the government borrows for infrastructure projects that create value then we win on multiple levels. First, we employee thousands of people and stimulate the economy now, which helps solve the price stability problem noted above. Second, if we build ourselves an incredibly valuable smart grid, fix the deferred maintenance of our transport system, invest in renewable domestic energy production and create a killer internet pipeline system, we create an infrastructure that generates wealth for decades. We are living on the investments made by our ancestors in the 30s. People are still powering their houses from Hoover Dam.

Smart grids, combined with alternative energy and better internet pipelines have synergies that we have not yet imagined or begun to exploit. Similarly, the combination of fixing our roads and pushing the development of cleaner more fuel efficient trucks will improve our interstate commerce and pay dividends, we haven't yet considered.

We can't afford inaction. If we dance around the volcano now, we'll be sacrificed later. As our 20th century infrastructure falls into further obsolescence.