March 11, 2009

The Economy (Keep It Simple, Stupid)

Look, it is so simple.
We cannot spend or borrow our way out of debt. Period. End of sentence. We have no money.

The federal and seemingly most state governments are addicts to a drug called money. Like a crack addict needing a fix, just as soon as they get a fix, they want that next one. The elected officials of this country are behaving like kids at the local arcade. You beg for a quarter and no sooner do you get one than you spend it and begin begging for another with absolutely nothing to show for it.
Throwing money at the problem is not a solution.
The major banks were all bought out (well, all the big ones but Lehman Brothers) and Fannie and Freddie’s debts were absorbed BEFORE the bailout for 700 Billion was passed. ( A number which, you know, wasn’t based on any real data point, it was just a really big number)Then within the space of a week that 700 billion grew to more like 850 with all the absolutely shameful goodies they rewarded themselves with. And not to forget the money we spent on the auto industry. Money hand over fist. Now the retailers want money.

As soon as someone can explain to me how borrowing more money and spending it will help us out of a problem caused by spending money we didn’t have and giving loans to people who should not have received them I will be all for it. That sounds like a winning combination if it is true.
Here are some observations I have:
· If you raise taxes on businesses and the choice for that business is a) lowering profits, b) raising consumer prices, c) moving out of this country, or d) firing people, I can almost guarantee you it will not be to lower profits. That is assuming any companies will make a profit in the current economic climate. In fact in reality all taxes levied against corporations are indirectly paid by the consumer but I can understand how this would be lost on a career politician.
· You cannot pay for your wish list by taxing capital gains...because now there are not going to be any.
· $1000 dollars will not change my way of life, I mean sure, I like it, and I can use it. But it does not change my economic standing in my community. Offering people 1000 dollar checks is simply buying votes.
· If you don't pay taxes I suppose the threat of higher taxes doesn't mean much except a pay raise for you.
· If you don't pay taxes (and by that I mean if your refund is more than you paid) you by definition cannot get a tax cut. That extra you got back came from me. You are welcome.
· Any and all people who have any sort of government job or govt. subsidized job (schoolteacher, police officer, DOT employee, farmers, politicians, bureaucrats, etc) DO NOT REALLY PAY INCOME TAXES. They are paid by tax dollars so the tax dollars they pay are simply a lowering of the amount of money those of us in the private sector have to pay them through the real taxes that we pay. Add that to the elderly on Medicare and social security (which I do not mind supporting), the poor on welfare (both those who won't and those who haven't found gainful employment), the people on disability (both the ones who should and those who shouldn't be), the people in prison that we all must support, and finally the people who work yet earn so little (God bless them) that they get double what they pay refunded as (un) earned tax credits, and you begin to understand there are very few people who actually pay taxes and fund all this consumption we enjoy. Once again, I understand this being a hard truth to swallow for most; especially anyone I just mentioned.

I am going to throw one more thing out there. Let’s look at this all another way. IF all it took all this time to make the economy strong was for the government to spend money by the school bus load why have we not been doing this all along, I mean if all this spending will get us OUT of the recession, think what all this spending could have done in good economic times. Hell none of us would have had to work if that worked like they portray it to work. If spending this kind of money will rescue the economy then if the economy was in good shape and the government had been spending money by the freight car load then we would all have been driving Bentleys, watching the plasma, drinking champagne you name it and none of us would have to work.

They have spent more money in any one of the bills than it would have taken to have paid off every credit card in the US “total U.S. consumer debt, not including mortgages, was $2.46 trillion in June of 2007”

They have spend enough money ALREADY to pay off EVERY SINGLE mortgage in the US. US Mortgage Debt is around 11 Trillion dollars according to Reuters Finance in Feb of 2009. So lets add that up. Through February 2009 according to’s bailout tracker the Government has committed or promised (click to enlarge):

By my figures that is $11,623,630,000,000 (that is 11.6 trillion for everyone else like me who has a hard time with that many zeros)

Think what that would have done for the economy!

People have a hard time getting their mind around this kind of money. Here are a few little factoids I have been able to find regarding money…

One Million dollars in $1 bills weighs 1.1 tons
One Million in $20 bills weighs 110 lbs
One Million in $100 Bills weighs 22 lbs.
One Billion in $100 bills would weigh 22,000 lbs or 11 tons. This could be hauled by two dump trucks
One trillion dollars in $100 bills would weigh over 11,000 tons.
To carry away a trillion dollars in $100 bills would require a caravan of 500 tractor trailers, stretching over six miles.
A trillion dollars worth of $100 bills placed end to end would reach the Moon. And back. Twice.
A million dollar stack of $100 bills would be 4 feet tall. A trillion dollar stack of $100 bills would be 770 miles high. That’s more than 3 times higher than the ISS Space Station orbits the Earth.
In pennies, a trillion dollars would weigh 275 million tons. If pennies were still made from copper, it would consume the entire USA copper production for the next 233 years just to make the coins.
A trillion dollars worth of 1 carat “D” flawless diamonds would require a bucket large enough to hold 36 million of them. That bucket of diamonds would weigh more than 15,000 pounds.
A trillion dollars of gold would weigh 35,000 tons. That would be equivalent to a fleet of 20,000 Ford Mustangs made out of solid gold.
A trillion dollars of silver would weigh 5.5 billion pounds, or more than the weight of seven Empire State buildings. At current worldwide production levels, it would take over 80 years to accumulate that much silver.
One trillion dollars would cost every American $3276.68 if the cost were spread equally among all residents. That’s $8619.87 per household.
One trillion dollars exceeds the entire Gross Domestic Product of Mexico or Australia.
One trillion dollars exceeds the entire Gross Domestic Product of Saudi Arabia, Israel and Switzerland, combined.
One trillion dollars would buy using a coupon at Domino’s everyone from Brooklyn to Mumbai 15 pizzas. It would take over 1600 of the largest cargo ships to hold them all.
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