The Rockin Johnny B

Tuesday, February 19, 2013

Oh that pesky deficit

Been stayin away from FB for a while. Been watchin the craziness in Washington continue on it's merry Beltway way. Sometimes I wonder if congress-folk understand simple math. Here's and example. If you spend 1 dollar and you don't make 1 dollar back, what do you call that transaction? That's a rhetorical question. Let me answer, that's called a 'deficit.' Get it? If you spend money and are unable to pay it back, it's called a deficit. That's what we are faced with, a huge deficit.

Now, we could sit here and blame the Bush's. We could blame Good Ol' Ronnie Reagan or even Bill Clinton. Or if you really want to cast some blame, let's blame Barack Obama who inherited a deficit when he took office. Okay, now that we've found our sacrificial lambs, tell me, do you feel better? Is the deficit better? If the answer is no, read on.

Economists, like philosophers, agree on very little. But one thing they all seem to be consistent on is spending and saving. In times of plenty, you save. In times of economic stress, you spend. It's simple math. In times of stress, you have to spend in order to keep an economy strong. Spending is already happening in times of plenty. However, when the government continues to spend in times of plenty to the point of not replacing the money spent, it becomes a huge problem when the economy is in the doldrums. So far, I bet you can see what I'm talking about. But wait, I'm gonna slip you a micky.

In order to get back the money that is missing, i.e., the deficit, it takes more spending rather than cuts in spending. Let me say that one more time, because most Republicans don't get this. In times of stress, the government must increase it's spending to relieve the deficit. At first, this doesn't seem to make sense, but let's go back to the one dollar model in the first paragraph.

One dollar minus one dollar equals zero dollars, right? Show me where you can cut spending to get that one dollar back. Here's the simple answer, borrow it. We've done that to the tune of several trillion dollars – does anyone even understand that figure? One trillion dollar. One thousand billion dollars. That's simply beyond the human understanding of us regular folks. Most of us have a problem getting our mind around a million dollars, let alone a billion dollars or a thousand billion dollars. And that's why everyone is completely ga-ga over this deficit business. It's simply a sci-fi amount of money. But really it isn't.

A trillion dollars is no different than one dollar...both are dollars and all are made the same way...they are printed by the government. So, why don't we just go out there and mint up enough money to cover our deficit? Actually, we could. And, believe it or not, that thought has been bandied about. People have advocated a trillion dollar platinum coin to be used to pay back the trillions of dollars we owe. It could actually be done. But what would happen if we did that?

What is money? In the far distant past, rocks were money. Shells were money. Any thing we say is money can be money. We've chosen to call certain coins and certain types of paper money and we all accept these 'things' as being our medium of exchange. I know all you who went to high school heard that phrase before: medium of exchange. But most of us slept through that class and didn't really get the concept, so here goes.

Money was created because carrying around a bunch of rocks, shells, chickens –what ever – was just too clumsy and tiresome. So a bunch of smart farmers got together and said, let's call silver/gold coins money and put an intrinsic value on these coins. We will call it the Gold and Silver Standard and that will back the paper money we print out with 'real' value. That lasted until Richard Nixon got rid of the standard stating it was outdated and unnecessary. All we had to do was back our money with the full faith of the mighty U.S. Government. This, ladies and gentlemen, was almost the same as having faith that there is a God and that God will take care of you no matter what. Unfortunately, this also meant that the good ol' government could spend like a sailor and not pay back that there pesky dollar, they could simply print more money and that's the basic cause of the deficit today. You see, there is a finite amount of gold out there to back a currency. You cannot simply create gold out of thin air. Therefore, the government could only spend to the limit of how much gold we had in the coffers at that would have been it.

But, how can we finance our wars? How can we take care of our needs at home when we run out of gold-backed dollars? HELLO! It's called a BUDGET! IT'S CALLED A BUDGET YOU ABSOLUTELY POSITIVELY HAVE TO ABIDE BY.

Are you getting the picture yet? We have way more dollars out there than we have gold to back 'em up. All we have is American Reputation to back 'em. And now congress is messing with that by saying they will not increase the debt limit. What would happen to the American economy if we lost our credit rating completely? SAY IT WITH ME....GREECE. Congress, of course, knows that this cannot happen. So, why do they toy with the deficit like they are doing now? There's only one reason: politics. If we, as the Republican Party, seem like we are hard on the Democratic President, then the public will vote for us because they will see us and being fiscally responsible. Sorry, I gotta say that again, the Reps think by holding up the debt ceiling, they will seem to the public as being FISCALLY RESPONSIBLE. Is that ludicrous or what? What, in actuality, is happening, is they are causing a possible rift in the economic structure of the American Economy. They are also messing with America's credit rating worldwide and finally, they are ruining the reputation of their own party. And yet...and yet...they would like you to believe they have YOUR best interests at heart. Bullshit. Who's interests do they have at heart, I ask ya...who's?

So, when it comes time to vote on your new and exciting congressmen and women, who ya gonna call?  Ghostbusters?

No comments:

Post a Comment