I Can Make Us All Rich Overnight!
Just elect me president next time around.
I Can Make Us All Rich Overnight!
Just elect me president, and I will write an executive order requiring the government to put a million dollars in everyone’s bank account no later than the next morning. Presto! We’re all rich!
Intuitively, you probably realize that just won’t work. Well, why not? We can all take our money and buy that car we’ve been looking at. Or a house. Or that car and a house. And we can all go out to dinner and shows more often.
But intuitively you know it won’t work. Don’t you just hate intuition?! So, let’s ignore intuition, and just do it. As your new president I hereby grant everyone a million dollars. Congratulations, we can all now run out and buy a new car and a new house. Perhaps you already see the problem. There aren’t enough new cars, and there aren’t enough new houses. Printing all that money took nothing more than a push of a button, but creating all those new cars and houses takes real physical effort and man-hours.
Whose man-hours? Not mine, because I am now rich and don’t have to work. Not yours, for the same reason. Not anybody’s because we’re all rich and no longer need to work!
That’s the problem with governments. They play make-believe, when they need to be dedicated students of reality. As I frequently say, governments can print money, but they can’t print prosperity.
But wait! It gets worse! The government has already printed money that isn’t backed up with any creation of value. Our federal government has put us all 37 trillion dollars in debt. Where did it all go? Who the hell knows? But it’s gone. But the debt remains, and it either gets paid with money that already exists, and that means taking it from us, taking it from everyone; or the government can just print more money.
I’m for that second one, aren’t you? Print more money to pay for the debt, and then we can keep our money and buy stuff. But that makes money worth even less. The more money a government prints, the less it’s worth. Think baseball cards. If the card company prints a bunch of cards of some popular celebrity ball player, each card will be worth less. Scarcity is a factor. So, the baseball card company prints relatively few of that guy’s cards so that collectors will buy bunches of packs of gum to get that one card. The more cards they print, the less each is worth.
Supply and demand: The cost of anything is determined by how much of it there is, and how many people want it. If there are ten widgets available, and nine people want one, everybody can get one, with one left over. So, the price stays moderate, even goes down. If there are ten widgets and eleven people want one, the shortage of widgets causes the price to go up. This is an economic law that is nearly as inviolable as the law of gravity. No matter how you try to fudge, supply and demand still holds.
The government prints money like crazy, so the money becomes worth less. Not only that, but that pesky interest on the debt. That 37 trillion dollar debt averages out to around $100,000 for every American citizen. But you don’t care, because you aren’t paying the interest. Right? Wrong. You’re not paying it directly, but you’re paying. Just paying the interest on that debt costs over a trillion dollars per year. That’s about $4000/yr per person.
Whatever it is that the government spent that 37 trillion on is history. Our future is faced with a trillion dollars of debt payment every year, for money spent in the past. That’s $8000/couple and about $15,000 per family of your taxes going to debt payment instead of going to your healthcare, your retirement, your education, paving roads, etc.
If you don’t pay your credit cards every month, I hope you know that the things you buy cost more than the purchase price. Depending on how long you take to pay off purchases, you can easily pay close to double what the price tag was. The only upside is that you get to buy your goods now, instead of waiting until you have the cash. But, you say, you just don’t have enough to pay cash, and you need to buy the goods. Well, think about it. If you don’t have enough to pay a hundred dollars for something, then you sure as hell can’t afford to pay $200, even over time. Doing so diminishes your future buying power by far more than you gain by buying on credit today.
But who can afford to buy a house for cash, right? You can’t. But the government can. It can pay cash for almost anything, no matter how expensive. It merely has to print the money. Well then, why does it borrow money? Because it’s incompetent, that’s why. Did you really think these are people of superior intelligence, with economic savvy and high principles? Nobody thinks that anymore.
No, the reason we are so deeply in debt is not because it’s all part of carefully crafted plan; it’s because of incompetence. It’s because our great leaders believe that ‘buy now, pay later’ is a viable economic strategy. And, yes, it can be. But with the federal government, it is an ongoing boondoggle. It has been coming on for decades. People like me have been warning about it for decades.
Are we close to economic collapse? Nobody knows for sure. Shouldn’t we know for sure? We should be confident that our economy is so strong that economic collapse is out of the question. That’s how it could be. That’s how it should be.
Doing something the same way for decades starts feeling familiar. It starts to feel comfortable. And that can be dangerous. The only way to a brighter future is by not doing what we’re used to doing. It’s by experiencing the discomfort of being responsible, and electing responsible leaders. Ultimately, our future is not up to them, it’s up to us.
Many/most of us have an uneasy feeling about the future, and for good reason. We keep buying now, and leaving it to others to pay later. First, that’s just wrong. Second, it has caught up with us. It is time for us to produce more, while spending less. That will create surpluses. And surplus can result in a wonderful feeling.
Common sense is not so common anymore and any elected official that attempts to address the spending issue is touching the "third rail." As they say in business, bankruptcy happens slowly, then all at once. I was hoping the new administration would make some significant cuts but so far...well, we'll see.