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.
Showing posts with label deficit spending. Show all posts
Showing posts with label deficit spending. Show all posts
Monday, July 19, 2010
Saturday, January 30, 2010
The Problem with Government Spending
I was sitting in a small rural cafe one morning in 1984. The conversation turned to politics as usual. The problem is government spending and the primary culprits are women having babies and foreign aid; blah-blah-blah. I looked around the room and noted that all but three of us were collecting Social Security and we were farmers.
And so I said, "The problem with government spending is that everyone in this room is going to get a government check this year."
The youngest one jumped to his feet and invited me to continue this discussion in the parking lot.
I assumed my least threating body language and asked, "Did you sign up for the farm program?"
"Well yeah, but that's different!" he replied.
"I didn't say you don't deserve it or that it was a bad thing to do. All I said was; the problem with government spending is that everyone in this room is going to get a government check this year and that is the problem with government spending."
They changed the subject.
Twenty five years later an even larger proportion of the population is getting a government check. You need to review your sources of income before you self-righteously proclaim that you don't get government money. For example, I work for the airport and a significant part of our income is based on Federal Grants. So if that money were to disappear, a large number of jobs would disappear with it. Temporarily. At some point, the work would need to be done and the money would be found. Where does your employer get their money? Are they or the company that owns them dependent upon some government grant or business?
Have you drawn unemployment insurance, food stamps, reduced cost school lunches or breakfast? It could be argued that earned income credit is an entitlement that contributes to massive government deficit.
I repeat, the problem with government spending is that too many people, including you and me, are getting money from the government. The President's announcement to freeze discretionary spending at the current elevated level does not solve the problem. You must reduce, cut, eliminate spending.
President Bush (41) belatedly came to the reduce spending idea at the end of his unsuccessful bid for reelection in 1992. He declared over and over; "The problem is entitlements". That is correct. Approximately 2/3 of Federal spending is on programs called entitlements. He never specified any particular entitlement spending that needed to be reduced; therefore I considered his pitch to be disingenuous. He was probably thinking about the programs that are commonly called welfare. In fact, the largest single entitlement program is Social Security. The second largest is Medicare. The third largest is Medicaid.
The current occupant (of the White House) seems to believe the best way to reduce spending on these entitlements is to control everyone's access to medical care and then use this control to ration care. Ultimately people will die prematurely thereby reducing the burden on Social Security, Medicare, and Medicaid.
Full disclosure: I am 65 years old and I do NOT want the government to ration my access to health care. I do NOT subscribe to Medicare and will refuse it as long as I can. The Federal government foreclosed my retirement plan and the only pension that I have is Social Security. (Link)
There are a number of alternatives to the President's vision of our future; but you won't learn of them by reading the newspaper or watching the news on television. I learned of these alternatives by listening to talk radio and searching the internet. The following links will inform you of alternatives to spending the country into oblivion.
Wall Street Journal Rep. Paul Ryan, R-WI 'Prosperity Plan"
Taking Back our Fiscal Future (White Paper)
Doctors for Patient Care What doesn't work
Comparison of Republican vs. Democrat Health Care Plans
You are invited to share ideas you have discovered that will reduce government spending and intrusion.
And so I said, "The problem with government spending is that everyone in this room is going to get a government check this year."
The youngest one jumped to his feet and invited me to continue this discussion in the parking lot.
I assumed my least threating body language and asked, "Did you sign up for the farm program?"
"Well yeah, but that's different!" he replied.
"I didn't say you don't deserve it or that it was a bad thing to do. All I said was; the problem with government spending is that everyone in this room is going to get a government check this year and that is the problem with government spending."
They changed the subject.
Twenty five years later an even larger proportion of the population is getting a government check. You need to review your sources of income before you self-righteously proclaim that you don't get government money. For example, I work for the airport and a significant part of our income is based on Federal Grants. So if that money were to disappear, a large number of jobs would disappear with it. Temporarily. At some point, the work would need to be done and the money would be found. Where does your employer get their money? Are they or the company that owns them dependent upon some government grant or business?
Have you drawn unemployment insurance, food stamps, reduced cost school lunches or breakfast? It could be argued that earned income credit is an entitlement that contributes to massive government deficit.
I repeat, the problem with government spending is that too many people, including you and me, are getting money from the government. The President's announcement to freeze discretionary spending at the current elevated level does not solve the problem. You must reduce, cut, eliminate spending.
President Bush (41) belatedly came to the reduce spending idea at the end of his unsuccessful bid for reelection in 1992. He declared over and over; "The problem is entitlements". That is correct. Approximately 2/3 of Federal spending is on programs called entitlements. He never specified any particular entitlement spending that needed to be reduced; therefore I considered his pitch to be disingenuous. He was probably thinking about the programs that are commonly called welfare. In fact, the largest single entitlement program is Social Security. The second largest is Medicare. The third largest is Medicaid.
The current occupant (of the White House) seems to believe the best way to reduce spending on these entitlements is to control everyone's access to medical care and then use this control to ration care. Ultimately people will die prematurely thereby reducing the burden on Social Security, Medicare, and Medicaid.
Full disclosure: I am 65 years old and I do NOT want the government to ration my access to health care. I do NOT subscribe to Medicare and will refuse it as long as I can. The Federal government foreclosed my retirement plan and the only pension that I have is Social Security. (Link)
There are a number of alternatives to the President's vision of our future; but you won't learn of them by reading the newspaper or watching the news on television. I learned of these alternatives by listening to talk radio and searching the internet. The following links will inform you of alternatives to spending the country into oblivion.
Wall Street Journal Rep. Paul Ryan, R-WI 'Prosperity Plan"
Taking Back our Fiscal Future (White Paper)
Doctors for Patient Care What doesn't work
Comparison of Republican vs. Democrat Health Care Plans
You are invited to share ideas you have discovered that will reduce government spending and intrusion.
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