We Have No Money

Calendar June 7, 2010 | Posted by Michael S. Langston

This is one of those cases where it’s almost as if the planets aligned perfectly to show anyone willing to see the complete idiocy of our current economic policies.  In the midst of a recovery that is anything other than certain, a time when the US government, its citizens, and indeed larges swaths of the world are simply broke, yet we keep on spending.

The Federal Reserve Chairman has stated directly (here via Reason.com):

Today may be terrible, but tomorrow is going to be much worse, at least as measured by such metrics as deficits, debt, and entitlement spending. In an April speech, Federal Reserve Chairman Ben Bernanke laid out the misery that awaits us. “The arithmetic is, unfortunately, quite clear,” he said. “To avoid large and unsustainable budget deficits, the nation will ultimately have to choose among higher taxes, modifications to entitlement programs such as Social Security and Medicare, less spending on everything else from education to defense, or some combination of the above.”…

Yet just yesterday, the committee to reduce budget deficits is joining a long line of other government employees in asking for more.  Over @ Cato (here):

It’s rather symbolic of what’s wrong with Washington that a commission ostensibly created to promote deficit reduction is seeking a bigger budget….

Yep, that’s correct.  As private businesses have continued to contract to meet decreased demands, the federal government continues to grow.  This happens when the federal government is allowed to print money, but that’s a side note.

Simple fact is, we have no money, yet we are still spending like drunken sailors and it seems we don’t understand.  When the governor of New Jersey is forced to tell people directly:  unlike the US government, the state of New Jersey can’t print money, we’ve run into a major problem.

& like most problems, the federal government will not help.  They are the enemy of spending policy as we can easily see, but for those that think maybe they can help here… please watch their latest commercials for the census count and ask yourself what is they underlying theme?  On the government’s own website propoganda, what is the underlying theme?

What is the main thing they want you to take away from this?  That government is the answer.  Our leaders are telling us, in no uncertain terms the same unsustainable and morally questionable hypothesis:  Make sure you get counted…. so you too can get paid.

Maybe it’s time to start asking:  exactly where are they leading us?

Category Categories: Critical Thinking, Economics, People/Blogs, Political Philosophy, Politics  |  Tag Tags: , , , ,  |  Comments 6 Comments

Obama to Public: If At First You Don’t Succeed, Spend More Money

Calendar July 10, 2009 | Posted by Michael S. Langston

Before the last stimulus bill, the Obama administration trotted out how dire and desperate things are and would be without the all powerful government.  According to their reports, unemployment rates without the money would hit 10%, while with spending would not go above 8% (here).

By the government’s own standards and the new unemployment numbers of 9.5%, they have failed. But like true politicians, facts are just numbers that haven’t yet been spun.

With trillions of dollars in “stimulus” already spent on pet projects, buying up failed companies,  green jobs, and anything else the government can think of, the only thing they are now positive of is that it wasn’t enough.

Through Mr. Obama’s remarks after the G8 summit (here):

“While our markets are improving, too many people are still struggling,” Obama said at a press conference in L’Aquila, Italy after a summit of the Group of Eight nations. “Full recovery is still a ways off.”

and senior administration officials putting our feelers (here):

Senior administration officials think further stimulus might eventually be needed but they do not want to have this fight now. Both the economics and the politics call for postponing a decision to late this year or early in 2010.

& of course, the sage Warren Buffet’s self-serving advice (here):

As folks in Washington and the rest of the country grumble about the depressed job market and underwhelming consumer spending reports, the calls for a second stimulus continue.

“I think that a second one may well be called for,” Warren Buffett , the widely respected investor, said Thursday morning on ABC’s “Good Morning America.”

It appears we’re on a path to spend more money we don’t have.  Effectively, the government is acting just like the poor investors and home buyers did – buying a lot of stuff for too much money, which is completely borrowed.

As Cato notes:

Investors understand that increased government spending diverts valuable resources away from the private sector and ends up imposing even more demoralizing taxes on labor and capital.

A major study of 18 large economies by Alberto Alesina of Harvard and three colleagues appeared in the 2002 American Economic Review. This paper, “Fiscal Policy, Profits and Investment” found that the surest way to make economies boom can be through deep cuts in government spending–the exact opposite of the “fiscal stimulus” snake oil.

Like the problems of social security, medicare, and medicaid though, we’re simply going to borrow all of this money and kick the major problems down the road for whatever generation will suffer from our mistakes.  They will pay the higher taxes for lower benefits all because we can’t control our spending.

So for those playing the home game – the solution to alcoholism is to drink, just as the solution to a spending binge is more spending.

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