Economics=Dismal Science. Budget Deficits Balance Of Trade
Read more articles on Finance and Politics.October 14, 2008
Posted by neillevine
October 14, 2008
Posted by neillevine
477 Views
Long before the current age of free money and munificent benefits, economics earned the sobriquet “dismal science” for good reason. The current dramatic economic meltdown and associated roller coaster excitement only serves to spell out why this is such a well earned description of contempt.
Politicians have several financial problems that they do not want anyone to know about and they most assuredly do not want to discuss in any above board, transparent way as they spread goody benefits far and wide for all (actually, many, if not all depending pm how good you count goodies, goody goody) to use and enjoy.
Let us start with the fact that the government’s budget is in deficit. Increased federal spending only tends to make this problem worse by sending the shortfall in the wrong direction. The bigger the deficit, of course, the greater the amount of revenue that has to be raised or, alternatively, the size of the cut backs that have to be taken. Since the current crew of ingrained incumbents continues to promise free money I do not see them doing either nor do I think raising taxes is going to be popular. Despite the double talk, the alternatives are inflation, meaning cheap money that does not buy much of anything as dissolute countries such as Zimbabwe amply demonstrate or bankruptcy, which is worse and which eventually means not paying at all, except that the cure is worse than the disease.
As matters stand, I do not see much in the way of honesty as far as real solutions are concerned translating into more financial scares and other nasty games. Truth be told, there is little or no discussion or explanation. Just empty promises and then more empty promises.
Fortunately, a lot of people do not buy political drivel.
And with the depressed housing and real estate markets and declining stock markets, big business busts and other turmoil on Wall Street, I would expect all this economic havoc to lead to declining government revenue, making the deficit worse. Yet elected officials continue to make promises to spend, spend, spend, a balm for alleged suffering that might not be curable anyhow. So they keep on talking up dire scenarios that may not stop like the “song that never ends. It goes on and on my friend.” I hope you have heard that one and outgrown it.
Remember the supposed purpose of that three hundred dollar tax rebate check was to stimulate economic activity. Unfortunately, it stimulated a bigger deficit and increased imports
So what can be done? As a dismal science, the choices are not particularly nice. And there are other difficult problems that are just as hard to solve.
There is a bid trade deficit, as I have mentioned. The declining dollar has helped some. But a cheap greenback makes it hard to purchase essential imported goods. Worse, a lot of foreigners look down on this as they, too, are looking for the revenue. The stock market debacle does help the balance of trade since there is less money to spend. It is, however, rather destructive. There are better ways to improve the balance between imports and exports. Then there is the high price of energy that benefits many foreign governments. And interest rates can help or hurt depending on what you are looking at and how you look at it.
Now Speaker Pelosi is complaining about steamrollers. Next it will be flat, stale bread.
Associated with all these economic problems is the war on terror, which is another song that does not end. We have a government that does not want to antagonize Pakistani popular opinion yet launches missile strikes into the country without a second thought. First of all, this seems like an exercise in macho missile launching. Secondly, it would seem to be comparatively ineffective. Personally, I think American politicians are mollycoddling terrorists in a wrong headed effort to display kindness.
Asking for the head of Osama Bin Laden would be more to the point. Explaining he is wanted dead or alive is quite specific. Why not explain the benefits of a generous bounty for his capture.
As I have said, I believe politicians in Washington are doing a poor job of explaining what is what and an excellent job of playing games that only politicians can play. If people aren’t careful politicians will get us all killed. Why not boost confidence instead?
Copyright © 2006
Terms & Conditions
