Thursday, July 7, 2011

Ron Paul's hog wash

"Deficits mean future tax increases, pure and simple. Deficit spending should be viewed as a tax on future generations, and politicians who create deficits should be exposed as tax hikers."
-- Ron Paul

Pure and very simple hog-wash. Might taxes go up? Sure. Will it be to finance the deficit? Nope.

Taxes may go up to drain excess money out of the economy to avoid inflation but taxes don't finance anything. The government doesn't run to a tin box when it needs money and worry if the box is empty. It sounds strange but the government neither has nor doesn't have money. It is self financing and needs to tax to balance the economy but not to collect money. There is no "place" for it to store collected money.

Antiquated Democrats

Ahh, the poor Democrats and their antiquated ideas.

Let's see, oh, that old saw about a 90% marginal rate that suggests that the very rich might be better off actually investing in company expansion to produce more and employ more. How funny.

And the silly idea of keeping taxes very low on the working people to improve their quality of life and to encourage an increase in demand for goods and services. Now that's a real giggle.

How about that silliness of helping the elderly and the infirm survive in a decent environment. Really off the wall.

Oh, and spending money on projects to improve the environment and infrastructure. Perhaps give employment to those that are searching for work but can't find it. Completely beyond the pale of rational, modern thought.

Regulate financial institutions? Really ridiculous. We must trust the operators to make good decisions. To consider reimposing bank regulations? So quaint.

The fact that these worked in the 1930s should not influence anyone today. We need to keep pouring money into the corporate coffers; eventually that will bring the economy around.



Sunday, July 3, 2011

A rational government?

Our faces are being smothered with the same curtain of misinformation. (Pay no attention to the men behind the curtain.) Continue to believe that we are in dire straits because of our terrible debt and unbalanced budget.

The country must face "hard time"; all the while feeding the men behind the curtain huge sums of money.

Does the country owe money to bond holders? Yes. Is that debt payable in anything but our own currency? NO!!!

Is there any fundamental economic principle forcing default on our bond payments? None at all. (Actually, the 14th Amendment makes laws limiting such just payments unconstitutional.)

The government buys and sells bonds as a way of controlling interest rates AND THAT'S ALL!! It doesn't need the money.

The Federal Reserve Governors set a target interest rate. The Fed then buys (to raise interest rates) or sells (guess why) bonds on the open market to move toward that target.

(This is a bit arcane but bear with me.) Deficit spending also tends to raise interest rates so the Fed has to sell bonds to balance that spending.

Deficit spending can also trigger inflation. I don't think that is a problem now. Why? Look at the unemployment numbers. Unfortunately, the only thing we don't control is fuel prices and that can pose a problem. However, every thing else in our economy is subject to rational control.

"Rational control", ahhh, a consummation devoutly to be wished. Cut spending we hear, just when the economy needs an influx of money. Raise taxes, just when the economy needs people to spend on goods and services to raise the demand. Default on paying the just returns on our bonds. I can only think of checking gasoline level with a match.

Either the politicians are that badly informed or they hope to keep us that way. Think about it and, perhaps, we can hold their feet to the fire and get some governance that makes sense.