economics free market

Budget gnashing of teeth

I’ve started seeing posts about how one team wants to “slash” the budget, leading to the impoverishment of millions because of cuts to to head start, planned parenthood, housing vouchers, NPR, etc. Of course the other team is yelling that the other side isn’t cutting enough. I’m going to split the difference and say that one side isn’t cutting much of anything, and the other side is making totally inconsequential (to the deficit) cuts. What needs to be addressed is Medicare, the Military, and Social Security. Everything else is window dressing. Predictably, neither side want to go near those things so what we are left with is political theatre.

Budgets at all levels are in pretty bad shape. What I’m hearing from the left is that tax cuts are what’s causing the deficits, and of course the right is blaming spending. Spending is, of course, the root of deficits. While both tax revenue and spending go into making a deficit, only one side of that equation is done to people, backed up with the threat of jail time. So I think there is a moral argument to cut spending as much as possible vs. raising taxes. Why folks seem to think it’s OK to take money from someone just because they have it has never made much sense to me. And that isn’t even taking into consideration the consequences of having too high an income tax…

This all reminds me of  the contortions people go through to lose weight. They will try various pills, diets, etc. when we all know what will lead to weight reduction, less food and more exercise. We’re going to need more taxes and less spending. Taxes are going to have to go up across the board, not just on the wealthy. Similarly, spending cuts are going to have to be across the board of the big three programs, at least on the national level. It’s the perfect solution, no one will be happy. What people want is more stuff as long as someone else is paying for it,  and so that’s what politicians promise.  That, in a nutshell, is how we end up where we are now.

I’m not sure what will be more effective, getting the political will up to stop eating so much and exercising more, or letting things go until we need bypass surgery/gastric bypass surgery. If the monetary system collapses, there will be enormous pain and suffering, but hopefully some sort of lesson would be learned. Plus, it would get our debt off the backs of subsequent generations… I’m sure that over time, the same mistakes will be made as long as fiat currency/fractional reserve banking is the norm. I worry that if the current lawmakers buckle down and do something sensible (not that I’m holding my breath) it won’t last long, probably only until the economy goes on another Fed induced boom. SIGH.

Do you remember what I was blogging about in September? Silver was $17 an ounce. It’s over $37 an ounce now. The longer the lawmakers quibble and nibble around the edges of the problem, silver and gold will continue to go up in price. Or is that the currency losing value? Just saying….

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