The economists today are debating whether we are in a recession or whether it is close at hand. Jobs are shrinking and that is a sign that the economy is moving in the direction of a recession. Jobs are down for the fourth month in a row. Everyone remembers the old joke about the difference between a recession and a depression. A recession is when your neighbor is out of work and a depression is when you are out of work. The politicians in Washington still have their jobs, so, I guess everything must be OK.
Yesterday I touched on a point at the end of my posting about the need to invest because of the erosion of the purchasing power of our dollar. Some economists will just ignore this point, while others may take this issue seriously. Because the government prints our money is no reason that the money should lose purchasing power over time. Government fiscal policy causes the dollar to lose value (purchasing power) over time.
A first-class letter cost four cents to mail in 1964. Within a matter of days, another postage increase will hit and a first-class letter will cost 42 cents to mail. In 44 years, the cost of mailing a letter has gone from four cents to 42 cents. Can you think of a few other things that have gone up in price?
Those that graduated from high school or college in 1964 and went to work and saved 10 percent of their income for 44 years, and after paying taxes every year on the interest earned would have what? The purchasing power of those dollars saved in the 60’s, 70’s, 80’s and 90’s have eroded with each passing year. I ask you, What is the incentive for Americans to save? Over the years, I have read numerous pieces by economists saying that Americans do not save enough.
What kind of country runs a monetary policy to the detriment of the majority of its people? The economists will either ignore this point or point to the fact that the individual is free to invest. Some economists will point to the fact that there is such a thing as a COLA, cost of living adjustment. But have you noticed when the government gives out inflation figures and the cost of living index, that they exclude energy and food from their calculations. What is that all about?
If the government included the increases in the cost of energy and food then they would have to raise the COLA and give people on Social Security more money every month.
Do you feel that the system is rigged against you? Unless you are willing to invest your money in the market, there is no way you can hope to maintain the purchasing power of your dollar over 44 years.
If there is no way for the millions of Americans to protect the purchasing power of their saved dollars other than investing them, then should it not follow that the government has an obligation to regulate, oversee and audit the investment business with a view towards protecting the investor? There are million of Americans invested in the markets, and yet the government protects the few thousand that are in the investment business. Does that make any sense? Where are the rights of the investor protected?
Think about how this game is run, and then think about how it should be run.
Years ago, I painted a piece I titled Level Playing Field No. 2. I painted it on a wine box lid from California and I used oil paints. The idea behind the painting is that there is no such thing as a level playing field, but rather it is the ideal that we strive for. Do you feel your government is striving to give you a level playing field when it comes to saving your money?
When it comes to our dollar, I do not see even the faintest image of the level playing field. I see a group, mostly men, living the good life and ignorant or indifferent to the plight of working people. Unless you are willing to put your saved dollars in the investment game, you do not have a prayer that the money you saved will take care of you when you retire.
We talk a lot about rights in this country. There should be a basic right that your government will not do anything to make your life, when you retire, a hardship. If you have tried to save for your retirement, you should be rewarded not punished. Unfortunately, the government has spent and reduced the economic stability of your future.
People will need to get more interested in what their government is doing with their tax dollars and the amount of borrowing the government is doing. When things get bad enough economically for enough people, perhaps then issues like abortion, gay marriage and stem cell research will take a back seat for enough people that issues such as money and inflation will become important to them. The clever politicians have given enough people a distraction, a side show, so that the important issues of economic survival get ignored. When people park their cars because they do not have money to drive them, and live in one room of their house because they do not have the money to heat them, perhaps then enough people will wake up to the fact that the government has not been pursuing a level playing field for all of the people for quite some time. Stay tuned.
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3 comments:
Ever have the feeling you are living in a giant ponzi scheme?
Unfortunately, politicians are not always the brightest in the group (they are suave salespeople though). We are now at point in time when "mindsets" are determining decisions for the future. Politicians are great at creating mindsets and having followers believe.
I worry about the long-term future of this country. As a society (maybe it's a human trait), we don't seem to be able to make rational decisions for the long-term.
We live in a more and more 'me first', self serving world/country/economy, you name it. How very disappointing.
I kind of like my idea of having the Federal Reserve Bank as the 4th branch of government. If they were on par with the Supreme Court, and not answerable to the Congress (and all that bullshit entails), perhaps the Fed could lay the facts on the table in a more forceful manner (and perhaps in the press and on TV as well). There has to be at least a few thousand economists in the U.S. that would agree, that in order to encourage people to save their money, that we would have to give them an incentive to save. At this point there is none. Buy what you want or need now, before the price goes up. In Germany in the early 1930's, the inflation was so out of control that people were paid twice a day so they could run out and buy bread and food, as the prices would go up later in the day. I have seen a photo of a wheel barrow full of paper money in Germany, showing what hyper-inflation is all about. We are no where near this kind of a disaster. Winslow, I agree, if a private corporation tried to pull off what the government does every day, they would be prosecuted for a Ponzi scheme. But the U.S. government gets away with it because the politicians are clever enough to distract the little people with bullshit issues like gay marriage and stem cell research. Create a diversion so the pick pockets can do their work. And, sad to say, it is still working.
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