Figure this one out.

The experts keep telling us that we have to get credit thawed to everyday consumers like you and me if we’re going to pull out of this economic tailspin. We’re not going to reverse nasty trends including high unemployment rates unless we’re spending. Translation: Credit good.

Meanwhile, another team of gurus is instructing everyone to stop living on credit and to adopt a cash-based lifestyle. The best way to weather downturns is to confront them without a debt load. Translation: Credit bad.

With a lot of distinction-drawing and some headache-inducing mental gyrations, you can almost reconcile those two viewpoints. When you start thinking about the whole credit good/credit bad thing in terms of credit cards.

I think most people would agree that credit card companies aren’t the friendliest bunch. They like to smack people around with junk fees and they use “the fine print” like nobody’s business. They even have this little trick called “universal default”. If you fall behind on your Discover bill, the folks who issued your Visa might just decide to jack you around with a higher rate or a lower limit–even if you’ve paid that Visa bill religiously since the Carter Administration.

Anyway, it’s not surprising that the behavior of the credit card companies infuriated consumers. Enough people griped that it caught the ears of those in Washington. Regulation followed.

That happened in December. The Federal Reserve Board came up with a series of regs to govern the behavior of the credit card companies. The new policies put a stake in the heart of universal default, require more warning for rate changes and greater overall transparency. For better or for worse, a change is coming to the world of credit cards. It’s not coming quickly, though. The new regulations don’t kick in until 2010.

In the meantime, the credit card companies are working on making the “transition”. Depending on who you ask, that means they’re either trying to behave according to the upcoming policies or that they’re trying to wring every last penny they can from the card-carrying populace while they still have the chance.

We’re all in favor of regulation here, right? Well, maybe not.

Some might object on principle, believing that the 1996 deregulation of the industry was a good thing and that only an unfettered market can produce optimal results. Most, however, would probably agree that there’s some room for consumer protection in a business that operates from a foundation of tiny-print contracts and tricky rate alterations that even the smartest consumers can’t really track (or defend against).

Others may object to regulating the industry because it’s bound to hurt the credit card industry’s bottom line. If the creditors can’t continue to make a healthy chunk of change from junk fees and mystery rate increases, they’re going to need to do a few other things. Those options including slashing credit lines to provide greater protection, tightening standards for issuing cards in the first place and doing away with some of the super-low rate offers.

Why should that bother us? If it’s true that increased consumer spending and confidence are essential to come out of this recessionary funk, the prospect of reducing available credit doesn’t sound that good, does it?

Remember, we’re dumping billions/trillions into banks so that they can offer more credit in hopes that will get the economy cooking again. So why would we want to simultaneously give credit issuers a reason to cut back on credit lines?

Seems a little self-defeating, doesn’t it?

Not necessarily. Remember, that credit debate has two sides. The other argues that the very reason we’re in a mess right now is because of over-reliance on credit. Those folks say it’s time we stop spending money we don’t have. Only through more responsible behavior as individuals and as a nation can we hope to beat the recession. They say there’s a lesson to be learned here and that the lesson is not to worship at the altar of credit.

From this perspective, it makes perfect sense to protect people from getting kicked in the face by nefarious credit card companies even if the opportunity cost of that decision is an overall credit reduction. The value of that credit is minimal compared to the value of protecting people from nasty creditor behavior.

Federal regulations of the credit card industry might be good for consumers, but they might not be good for credit card companies.  Which means they might not turn out good for consumers.  Which means helping consumers might prolong the recession.  Then again, maybe it’s the opposite.  Getting dizzy?  Me, too.

I don’t have a horse in this race myself. I think both sides are right. I think we can probably spend our way out of this recession and turn things around for awhile. The question is whether we’ll learn a lesson from the process that allows us to eventually re-gear our economy in a sane fashion. Knowing how likely that is (read: ain’t gonna happen), I’m not going to lose any sleep over whether or not the credit card companies start slashing access to dough in the face of new regulation.

This whole freakish swirl of seeming self-defeat is exactly what happens when convenient shorter-term solutions are at odds with long-term sanity. Throw the always contentious matter of consumer protection and market sanctity into the picture and it gets even crazier.

All I can say is that, on the level of personal finance, there’s never been a better time to pay off your cards, chop them up into tiny plastic shards and walk away from them.  Credit rates aren’t headed south of potential gains from other investments any time soon and even if regs make the industry a little softer in a year, you can’t expect any favors before 2010.