Even The Progressives Can’t Get Something For Nothing (All They Can Do Is Pretend)

WHERE OUR MONEY DIES ...

WHERE OUR MONEY DIES …

The Federal Reserve has kept interest rates low for a very long time, as part of its now perennial easy money policy. The Federal Funds Rate has remained below 1% since 2008. In effect, the Fed is giving it away. But this is reality no matter what politicians promise; the “gift” isn’t free. It is rather, debt that the taxpayers (and their progeny) will have to repay with interest, or watch their economy self-destruct as Argentina seems to be considering once again.

Interest is an economic result of a free market economy; when the prospect of repayment drops, interest rates rise in reaction, dropping again when repayment is more assured. When government intrusion negates that natural process, money no longer reacts to risk as it should, reacting to political goals or to corruption-distorted ones instead. Such distorted markets are less productive than free ones; less wealth is created. Eventually, so much capital is tied up in unproductive places that the economy grinds to a halt. Imagine the government steering money into the buggy-building industry as Henry Ford was gearing up? Today, it’s green power and electric car makers, today’s version of the old buggy folk.

The Bible points out that: “God is not mocked,”meaning that He has the last word. The “Dismal Science” is not mocked, either. Economics rules human affairs over the long term, regardless of politicians. While our President and Congress have been accepting applause for “green investments” of public funds, those investments have been going serially broke, leaving their debts to the hapless taxpayers. Wind power, sun power and electric cars may be political winners but they lose money; they are economic losers.

Forcing utility ratepayers to subsidize them as we now do, merely removes from the private economy, money that could otherwise be put to wealth creation. It is crippling.  Just as are biodiesel and gasahol  The farms being subsidized  represent capital that could, applied elsewhere, be productive but is instead compelled waste.

Consider too the result if you were able to keep all of your earnings that are now taken for such purposes. Consider what you might do with your earnings now taken for healthcare and Social Security taxes. Some it is true, would waste the extra money but government wastes more than we ever could. And those doing the wasting would be the only ones suffering from it.

Finally, note the now notoriously underfunded public pension plans. Private employers no longer pay pensions; they are unaffordable. Instead, they offer 401k and IRA plans. Only government worker still expect pensions. Both they and the taxpayers are deluded; between the Fed’s chronic inflation and its artificially low interest rates, no pension plan of any size has been able to accumulate the necessary amounts of money to pay pensions into the future. When interest is held down for long periods, investors can’t make much money safely, right? So now we see local governments and some states facing pension bankruptcy. Thank you, dear Fed. And your unacknowledged master, the Federal Government, too. You have taken such good care of us …

 

 

 

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About Jack Curtis

Suspicious of government, doubtful of economics, fond of figure skating (but the off-ice part, not so much)
This entry was posted in Deficits, Economics, Federal Reserve and tagged , , . Bookmark the permalink.

2 Responses to Even The Progressives Can’t Get Something For Nothing (All They Can Do Is Pretend)

  1. What annoys me most about our politicians is they meddle with systems that work until they break down. Once I thought it was just incompetence. Now I believe it is deliberate.

    • Jack Curtis says:

      Could be deliberate on occasion and disregard at other times, I suppose. I’d bet that it depends upon what the politicians believe they’re getting out of it …

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