Principle #3

Principle #3 - When you live above your means, you can do three things:
1) borrow
2) reduce savings
3) sell assets

For instance, if you spend more than you get paid, then you put vacations or luxury items on credit cards. To pay off these credit cards, you may have to reduce savings or use future income to pay them - thus saving less money.

If the Government spends over budget, then they will sell Treasury Bonds to foreign investors (selling assets). This principle always has a negative effect on the economy because savings and capital are reduced. This is bad because saving money is always good...always!