When America Sneezes

Disaster was narrowly averted today by swift action of the Federal Reserve and Federal Government.

In the past week, concerns have been expressed over the potential of the United States entering another recession. At first, response was weak. Over the weekend it found reinforcements, causing several major foreign exchanges to plunge in value and causing the New York Stock Exchange to drop almost 500 points in the first hour or two of trading.

It was only after the Federal Reserve dropped a primary interest rate by 3/4 point, the largest such move in years. Additionally the U.S. Federal Government pledged to spend $150 billion to stimulate the economy.

Is this necessarily a good thing? Maybe, but maybe not.

The Federal Government spending to encourage consumer and business spending is hypocritical. Why? Because they are spending our money taken through taxation instead of letting us spend it ourselves. This is, essentially, the point of the broken window fallacy.

In the broken window fallacy, a young boy breaks the window of a baker who, naturally, has to replace the broken pane. His neighbors get to talking about the issue, debating whether the young boy should be punished. On one hand the broken pane creates work. The glazer to make and install the glass is the first beneficiary. The money then passes to the glass supplier for the materials, to the clothier when the glazer buys a new shirt, and to the grocer when the glazer buys food for his family.

This is the way the government thinks. Giving money to welfare for example improves the income for the grocery merchants and maybe the landlords if they are given cash benefits for such.

The other side of the coin is this. The baker has to shell out the money to pay the glazer and thus has less to spend on supplies for his business, clothing for his own family, and even food. This is also the effect that government taxation has on the average citizen.

Government action over the years has not effectively lowered the taxes on the poor, only those who are already well off (of which virtually every politician is before they ever enter politics) and has very little to no effect on overall poverty. Why? Because, in truth, the poor have no more money than they did before. Some of them are just fed a little (and I do mean a little) better.

The problem in our society is not lack of government spending. It is bankers siphoning off profit for themselves by making economic slaves out of everyone else. A slave is forced to labor for the comfort and profit of another. The bible describes this relationship well when it says the debtor is slave of the creditor.

An example of this is overdraft fees. It costs the banks around $2 to process the average overdraft. The bank then charges the consumer $30-50 for covering the overdraft. If they return the item, most of them still charge the fee of $30-50. It is completely up to the arbitrary decision of a faceless banking bureaucrat who is seldom accountable for his/her decision.

Another example is the banks charging higher interest rates the lower the economic level of the borrower, allegedly because of the higher risk indicated by a lower credit rating. The net effect is the bank makes more money on low income citizens per dollar loaned than lending to "more worthy" borrowers.

The government spending programs are also frequently financed by borrowing from these same international bankers, making the government itself slave of its creditors. The fundamental base of economic problems is not consumer unwillingness to spend, it is their inability to spend because they are paying so much of their income in taxes, bank fees, and interest rates.

Word to the wise, think for yourselves. The government, big business, and banking industry stopped being our friends before World War II. Until we wake up to the truth and start working on things ourselves things are only going to get worse.

By the way, I will be returning to more frequent posting starting tomorrow. I had some financial issues and am having my Internet connection restored tomorrow morning.

Need a Band-Aid?

Today I strike against common sense. Common sense in that this idea is common to most Americans and, at face value, it seems to make sense.

What is it? The idea that if our governments (any level, take your pick) are showing a surplus at any given time, it should be given back to the tax payers immediately.

Seven years ago, when Clinton left office, our federal government was showing a financial surplus on its annual budget. It was a surplus that, I my opinion, should have gone to paying off some of our national debt.

Instead, the republicans swiftly realigned our budget to put us back on course for national bankruptcy in the near future. The surplus that should have paid off some of our national debt was instead given away as a tax cut that only helped the richest members of our society.

Why is this a problem, you ask? Simple. When our nation goes bankrupt in the next few years, the richest members of our society will simply hide in their gated- and armed guard-protected communities to ride out its aftermath. This leaves, guess who, outside to clean up the mess they have caused by their profiteering and outright greed.

The rich try to make it look like they are concerned for the welfare of the homeless, disabled, etc, etc. Yet percentage-wise, they give the least amount of income to programs to address the social needs of these populations. The same can be said for the government itself, which spends most of its money to guarantee that you and I will remain loyal little wage slaves, oblivious to the impending disaster, until it is too late.

This is the same thing that the Roman empire did during its last days. Back then they held daily circuses and gave away bread in a bid to convince the people that nothing was wrong. It worked. At least it did until Rome was burned by barbarian hordes. By then, of course, it was too late.

Is it too late for the United States? Only time will tell for certain, but I don't think we should wait to find out.

A Tax On Those Unable To Do Math

The Colorado Powerball Lottery is $210 million tonight. God only knows what it will be if no one hits it tonight. State lotteries are an interesting subject when one considers the odds of actually hitting the jackpot. The odds in Colorado are 1 in 146,107,962. Seem like pretty long odds, eh? But consider the current jackpot. Technically, even if you bought one ticket for every possible combination to ensure you would win, you would still be over $50 million ahead, providing you were the only one to hit the jackpot.

For the most part, those who purchase lottery tickets are doing little more than paying additional revenues to the state, usually used for educational and recreational support in the state. In a day when people are so against raising taxes more than they already are, they are more than willing to purchase a chance at instant millionaire status, regardless of the odds. Why this duality in thinking? Instant lotteries are more or less taking the place of the original American dream.

It unfortunately reflects the growing laziness of our society. Rather than work hard and earn our way to prosperity, people find it easier to gamble a dollar (or fifty) on a chance of instant prosperity, even though they have better odds of getting hit by lightning or a tornado. The funny thing is, with only a handful of contrary experiences, winning the lottery usually brings more problems than solutions for the winner.

The first experience of most winners is long lost relatives climbing out of the woodwork, scrambling for some small portion of the winnings. Then they frequently deal with hard luck stories asking for help in the mail and even legitimate requests from truly worthy nonprofits asking for major donations. Add to this the lack most people have of using money wisely and one can see where the problems quickly build.

The lure of instant success is an almost overpowering temptation, one which few people are prepared for. This problem reflects the growing demand for instant gratification in our society. We ask our politicians one year to fix major problems that have taken years or even decades to build, and then replace them a year or two later for not successfully solving the problem in that time, for example. We also expect financial investments to begin returning sums two, three or more times greater than our general economy is returning. The basic emotion behind all this is greed, the demand each of us has within them for all our wishes to come true yesterday if not sooner, with as little input and effort from us as possible.

This is NOT what made America the Mecca for success seekers from around the world. America was built on the blood, sweat, and tears of our forefathers. They invested everything they had and everything they were to give us the greatest nation on earth. It is up to us to continue this grand tradition. By putting our backs into it, we can rebuild the strength of America back to what it once was.

Gambling in any form is little more than giving away our hard earned wealth to lazy elitists and a grossly bloated government with little or nothing to show for it. The only thing, in truth, that we gain from gambling is the entertainment value, when it comes right down to brass tacks. The odds of actually winning anything significant from such gambing are stacked against us.

All that being said, with the jackpot over $200 million, I figure it is worth a little long-shot risk. At the moment, I am waiting for the drawing with five lottery tickets in hand. Wish me luck!