How the Deficit Depresses Our Economy


Our national debt, financed by treasury notes, bills, and bonds, depresses the economy by destroying private investment

The political class insists that we can’t cut our massive, $1,600,000,000,000 Federal deficit, because it would depress the economy and cost jobs. Their excuse is that the private economy is not creating jobs and wealth, so the government must take up the slack.

But what mysterious burden, on our economy, is preventing the basic private investment that creates wealth, allowing the economy to grow, jobs to be naturally created, all of us to prosper?

Ironically, it’s that very deficit.

How?

It’s because of the way the deficit must be financed:

The government has to raise every penny of the deficit it spends, by issuing treasury notes, bonds, and so on. Private people buy these, imagining they are “investing” by doing so. But real investment creates wealth, while government securities just finance deficit spending, as a debt that will be paid back by your grandchildren, as gigantic tax burdens.

This year, the Federal government will have to convince people to “invest” 1.6 trillion dollars in government notes and bonds, to pay for its deficit. Every single penny of that would, otherwise, have been invested in private enterprise, to create wealth.

Imagine if the private economy got an “extra” trillion-plus dollars of investment, next year. The massive growth in wealth and jobs is almost unimaginable.

Now imagine if, instead, the private economy had a trillion-plus in investment REMOVED from it by government. The massive loss in growth and jobs is entirely imaginable, because it’s what we’ve been suffering since the deficit increased almost one trillion dollars in 2009.

Every dollar the government spends steals one dollar from the private economy…either directly, by taking it through taxes, or indirectly, by financing it through a bond or note that steals that dollar from private investment.

Arizona’s Death Panel?


It’s bad enough that the Federal government created its first actual death panels thirty years ago, with organ transplants.

But, shortly after the Obamacare plan set up conditions that are likely to cause rationing, we have an example of how government health care is forced to decide who lives and dies, because of rationing.

In order to stay within their budget, Arizona has been forced to limit who is allowed to get organ transplants…literally picking who lives and dies. Already, 98 people have been identified who will not be allowed to get these transplants on Medicaid. This is what government health care must, inherently, do. It’s not the fault of Arizona, but part of Medicaid’s very nature.

In the 1980s, the Federal government imposed a ban on paid organ transplants, creating such a shortage that panels had to be set up to decide who got the rationed transplants, while a majority of transplant patients die while waiting, with lists up to ten years long.

Now, they are being forced by a socialized health care program to cut off even the few who might get transplants, dooming them to die.

We need real health care reform, not more of the very same government intervention that has caused the problem in the first place.

The Double Thank-You of Capitalism


John Stossel is correct, when he points out that politics and socialism are Zero Sum Games, where wealth is taken by force and nothing gained, while the free market is a Win-Win Game, where in any transaction both sides feel they have gained, not lost.

You thank the clerk, and he thanks you…because he wanted the money more than the product, and you wanted the product more than the money.

Keynes is Dead, Long Live…Keynes?


Each time a government has tried to spend its way out of a depression, the result has been ongoing economic failure

John Maynard Keynes was an economist…or at least a political activist who used economic-sounding arguments to justify government intervention.

In the 1930s, he was THE economist, if you believed in that government intervention.

But, as we all know, his Theory proved to be a complete failure. It failed to produce results during the Great Depression, but staggered on until the 1970s, when it failed so spectacularly, causing staflation, that it was pronounced dead, even by Liberals in the US and open socialists around the world.

But, unfortunately, George Bush came along in 2001, and after having run as a free marketer, governed as a Keynesian. He infected the political scene with the premise that you could stimulate an economy out of a downturn, by having the government spend massively, even as it increased regulation (in part, by putting strings on the spending). When the economy fell into trouble because of his bad foreign and domestic policies, he responded with Stimulus and Bailout™ packages. That trademark, of course, means that he must pay the Keynes estate a royalty for each mention.

Obama, having run as the Anti-Bush, has committed the perplexing political suicide of simply building on every Bush precedent…most of which really are more Liberal Democrat in tenor, anyway…and one of the symptoms is that he continued the Stimulus and Bailout™ packages.

The problem, as we predicted and is now proving true, is that stimulus spending and bailouts don’t help the economy: They hurt it.

This pattern of behavior has caused what people denying the word Depression call a “double dip recession”, which we’re entering (again) right now.

The only way out, is to end the Keynesian meddling, and let the economy grow on its own. Japan and Sweden learned this the hard way, after each suffering a “lost decade” in the nineties. Now it’s our turn.

The Anti-Jobs Bill: Tax Breaks for Welfare Jobs


If government could "create" jobs, it could simply pay half of the unemployed to dig holes, and the other half to fill them in, and we'd have full employment.

If government could "create" jobs, it could simply pay half of the unemployed to dig holes, and the other half to fill them in, and we'd have full employment.

Drug mega-giant Pfizer recently dealt with its bloated payroll in St Louis, Missouri, by laying off over 600 employees.

It had hired them in order to gain reduced tax punishment from the local government. It was given a “break” of almost seven million dollars on the massive property tax, in return for hiring over one thousand employees…apparently more than it would otherwise have chosen to hire, or else the “break” would have been a meaningless loss of revenue for a money-strapped government.

Maintaining make-work welfare jobs, of course, was just a needless burden on the company. Eventually, such government coercion contributed enough to its woes that Pfizer actually found it necessary to lay off over half of its staff. In all likelihood, this backlash resulted in fewer jobs left-over than if it hadn’t over-hired to begin with.

When the government “encourages” hiring, it creates an employment bubble, just like when it encouraged home ownership, it created a housing bubble. When the bubble bursts, the net result is more harm than good, just as with housing.

Government “stimulating jobs” causes even more job loss, in the long run.

And yet Congress is about to pass a “jobs bill” that involves tax breaks for make-work hiring. Companies will be pushed to employ people they wouldn’t have otherwise chosen to do, essentially being forced to live beyond their means. In the long run, as with the housing boom and with Pfizer, this will backfire and cause MORE unemployment.

When the government “creates” a job, it’s just engaging in another form of welfare. A job “created” where one wasn’t actually needed has no honor, and causes harm. It is a burden on society…one that will come back to haunt, just the way the stimulus spending, bailouts, and other government busybody behavior will do.

The way to create jobs is not to “create” them directly, any more than you make sickly person healthy by giving him cocaine to create energy. Jobs are a means to an end, not an end in themselves. They work because people work to create more wealth than their job pays, justifying its existence. What we need is more wealth creation, and then the jobs will come naturally. And what is stifling job creation, already, is massive government regulation and interference, including the “stimulus” spending that out-competes healthy private ventures.

Bunning (Almost) Fights Unemployment


When you subsidize anything, you get more of that thing. Including unemployment.
I have a friend who got fed up with his job, and gave it up because he felt collecting unemployment was a better option. This, alone, is evidence of how unemployment benefits increase unemployment…but it gets worse:

He eventually got tired of not working at all, and got a job one day a week, just low enough not to cut into his unemployment benefit.

Here comes the “worse” part.

His employer liked him, and kept begging him to work full time…but he planned to kick back and relax until unemployment ran out. That’s right, benefits not only caused him to CHOOSE to be unemployed, but to refuse to take a full-time job, keeping him on the unemployment roles. But at least it would eventually run out…right?

  • Then Bush and Congress decided to extend it.
  • Then, when it was about to run out (again), Obama and Congress extended it once more. My friend has ended up living off the taxpayers, indefinitely, while his employer dreams of GIVING him full time work.
  • Then Jim Bunning decided my friend must go back to work. His employer must have been thrilled.

Not that Bunning is a principled Conservative, who believes in not subsidizing unemployment. No, he is just a partisan RiNO grandstanding against unfunded government spending…now that Bush isn’t the one spearheading it.

Which may be why he caved in, just a short time later. My friend gets to remain a burden on society, unemployment gets to remain artificially high.

Ever wonder how much of the 10% unemployment is simply people who CHOOSE not to work, because the government subsidizes not working?

What we need is more people in Congress who are actually like Jim Bunning was pretending, for a few hours, to be.

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