The Perpetual Motion Machine

I took Econ 101 and 102 in college.  The thing that I remember was how they explained government spending, the Federal Reserve, and the multiplier effect.

It goes something like this:  The Federal Government collects revenue and spends money as directed by congress.  If congress chooses to spend more money than is collected; then the government issues debt instruments like T-bills, T-notes, and T-bonds.  If, by chance, they are unable to sell enough debt to the public then the Federal Reserve will buy the debt at a predetermined discount rate.

The Federal Reserve is a private banking company whose directors are appointed by the President with approval of congress and is tasked with providing a 'stable' money supply. This is a privately owned bank who creates money by simply writing a number in a ledger and collecting interest from the taxpayer on that number.  Is this a great country or WHAT??

But it gets better! Economists believe that every dollar the Federal government spends generates $5 of economic activity.  They also believe that every dollar spent by private business will generate $8 in economic activity.

Therefore; if the economy is retracting then the government needs to spend MORE to stimulate the economy.

WOW!!  Why not spend money when the economy is expanding?  I mean think about it; if spending 1,000 billion dollars will generate 5,000 billion dollars in economic activity why not spend 2,000 billion dollars and generate 10,000 billion dollars?  Better yet, if the government would spend 10,000 billion dollars then the tax revenue from the accompanying 50,000 billion would pay off the debt in one year.

A true perpetual motion machine!!  Paul Krugman; New York Times columnist, Princeton University professor, and all round smart person has been making this argument for weeks.

This came up again last week in the debate over extending unemployment benefits.  The Secretary of Labor scolded that one dollar of tax cuts only generates $1.15 of economic activity because  those who get the cuts save the money (those unpatriotic bastards).  One dollar of unemployment benefits generates $1.39 of economic activity by the fine, patriotic unemployed persons spending money at restaurants and buying clothes.

I know when I was unemployed I dined at fine restaurants every night and purchased a new wardrobe after I got home from my cruise.  NOT!!

Nearly everyone learns there is no such thing as perpetual motion by the third grade.  Sophisticated persons educated at the nation's finest universities are relieved of common sense in the isolated utopian world of academia where they are required to return to the dreams of childhood.

Our freedom and our liberty are at risk when these persons gain positions of power in our society and make us live in a dream world that cannot exist. 

Pray for a return of common sense and integrity.