Fiscal Faux Pas  

Posted by LibertyCast in ,

Pardon the long delay in the release of this post. With finals occupying much of my time and then constant problems with my internet provider I have had limited time and access to the internet to get much of anything of substance done.

I would like to bring up again the monetary and economic complications that the United States is currently going through. With all this talk over the mainstream media of how we are finally beginning to see the economy turn around I actually beg to differ.

Many liberals have such huge issues with Reaganomics/Trickle Down Theory/Supply Side Economics, regardless that in proper conditions it actually works, find this application entirely unfair, and justly right they are. As supply side economics increases economic investment and potential this is only truly effective when that investment is needed. When the demand or spending cannot meet the supply the economy it becomes overburdened and unstable.

Would you increase the height of a table without increasing the lengths of it's legs to support itself and expect it to prop itself up in thin air?

Of course not, that doesn't make any sense at all. Unfortunately, politicians and intellectuals coupled with the impact of the mainstream media fail to make sense of it for the common people. This of course is for numerous reasons to their own ends, but that is too long a subject for this article alone.

Well, President George W. Bush lead the charge in just this in recent years, and when other scams and rotten behaviors caught up to itself (such as the subprime mortgage crisis which I talk about it the following article here) the economy began to collapse in on itself. This has lead the United States to where it is at today. So how do you fix this? Well, there are actually numerous options, but practically none that either the government and private-sector can both agree upon exist in the same.

To increase demand to meet the supply our last effort has been to provide tax cuts to the middle and lower classes, those who typically spend money rather than invest it. Unfortunately, this really hasn't had the impact most of the media is attempting to feed us. Economists are saying in essence, as I compared before, that what has happened is that the table in mid-air has lowered itself back to the legs of the table. So yes, the economy is beginning to stabilize itself to some degree though in not as an efficient condition as it was prior to the crash.

To explain this further, look at all the lay offs that have been occurring, the businesses closing and consolidating, and overall unemployment levels. This has been the fatty investment that has been trimmed from our economy in order to compensate and balance itself out.

So why bring up what many are finally are beginning to learn and may be even understand already? Well, frankly we are still potential victims of the same treatment; now by the Federal Reserve.

The Fed, in order to compensate for a lack of supply of money is increasing that supply of money. Does that sound so fishy? Not yet, but stay with me. This lack of money is in banks. First, know that when banks do not have the money to make good on their loans and investments it is customary to borrow from other banks. BUT the other banks are in the same predicament this is where the Federal Reserve kicks in. The Fed buys bonds from the banks to give those banks more money to work with. But where do they get this money? May be you might say they create this investment in the economy out of thin air? Sound familiar? To be a bit more specific when the United States doesn't have the money it utilizes various programs such as increasing trade opportunities with foreign countries, such as China, for whom we are now indebted to.

So even though this is not a literal case the Fed, is in theory, just printing more money to make up for the lack of money. This reduces the value of the dollar ultimately creating inflation once exiting the depression the United States is currently in. The cost here is that we have to make good on those other programs and agreements, and must (timely) remove ourselves from them to reduce the period of inflation; restoring the value of the dollar. Again, a complicated manner because as we may begin to finally have money it begins losing its value...

Regardless, if you agree with me or other economists or not, if you believe that supply side economics is unjust as it unfairly favors the rich, how could you possibly support the same from the United States own semi-central bank? The Fed creates all this faux and unstable money to the benefit of big banks and corporations and while the common man is hurting from the deflation, lack of employment opportunities, and rising costs the businesses with this hidden money enjoy the windfall until the inflation catches up. All at the expense of the American tax payer. But as one might argue that the Federal Reserve doesn't use tax payer dollars as I already stated (they use money from elsewhere), directly, you are correct, but indirectly not. The American taxpayer pays taxes, if they even have work, and the value of the dollar goes less far for them while they get free money which will continue to impact our own economy as the value of the dollar goes down.

So how is it fair then that it is unfair for our government to propose tax break for the rich and those with investment in the economy, but then it is okay for the same treatment towards the lower and middle classes when a more centralized power does the same thing?

It is not. The principle is the same in one as it is in the other. Government involvement and regulation is not always the answer. The Federal Reserve is privately owned, but the impact of the government with in it is substantial. Government made poor decisions and took us to where we are and yet the same principle applied elsewhere is somehow expected to not do the same thing.

With this is my plea to please reconsider what government and the media keeps telling you and look to the real experts not bent in bureaucracy for the real truth. Keep an open eye and ear not always bent in government in that may we may all find the truth in real freedom and liberty.

This is so outrageous to me that we allow Washington to grant these kind of hypocritical and unstable powers just so that they have money to borrow against when they want it as they desire. And on top of that then to end up with all of this talk about credit card debt, of course the government is the exception. Not like the government should have to work within its means. I have always been skeptical of the gold standard because it is a limited resource, but now I'm beginning to believe that is its blessing. It would provide a nice check against the current ways of doing things.

This entry was posted on Monday, June 8, 2009 at Monday, June 08, 2009 and is filed under , . You can follow any responses to this entry through the comments feed .


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