This video from the Center for Freedom and Prosperity explains America's failing system of economics, started by the Bush Presidency and perpetuated by the Obama catastrophe in the making. Take five minutes and enjoy!
Showing posts with label economics. Show all posts
Showing posts with label economics. Show all posts
Tuesday, February 17, 2009
Monday, December 15, 2008
Economic Food for Thought - Keynesian Theory Failures
The Center for Freedom and Prosperity's latest video shares the failure of "Economic Stimulus" through wealth redistribution - called Keynesian Economics. This is why auto bail-outs will fail, bank bail-outs will fail, and why entitlement checks did nothing to stimulate the economy.
Watch. Learn. Share.
Watch. Learn. Share.
Friday, September 26, 2008
What is the RIGHT Answer to the Economy?
I took yesterday off from blogging to really think about the $700 Billion bail-out, the role of the federal government in our society, and what needs to happen to ensure the economy survives this self-made crisis.To start, it is necessary to understand the source of this melt-down of the lending firms. The source is not so much "greed" as it is "good intention". The Congress has struggled on economic issues in the past, attempting to do good for the market and main street, however, their constant intervention has led to the mess we are in today. So says the history books: The road to hell is paved with good intentions. That is where we find ourselves today - economic hell... or do we?
I haven't seen any run on the banks (those that are still operating). Folks are continuing to invest in the stock market - making some risky trades in order to capitalize on the shifting market. Ultimately, the market is still working - the economic fundamentals are sound in the United States, and as such, the economy will be sound as well. McCain was right. However, there is a stipulation.
The stipulation comes with the government bail-out. Bush and the Democrats keep coming forward claiming that every minute we wait is another minute that the country's economy continues to fail. Yet the only failure I have seen is nothing more than a correction in the market, and a move on the value of the dollar due to the Federal Reserve cranking out the funny money. (the value of the US dollar is currently 6% of 1913 dollar value - a loss of 94% value) The bail-out, if it is planned to be a $700Billion buy-out - which is code word for nationalization of the Investment, Insurance, and Banking industry - gives monopoly business power to the Federal Government... The US government will become a competing business who also makes the rules for the game... very dangerous.
What is the right answer?
After a long day contemplating the Constitution (yeah - it still exists, barely!), I have determined that the best plan forward would look like this:
If the economy is in trouble, reduce government spending. Pass a line-item-veto, or a "no earmark" law, eliminating pork and allowing the US to use all tax revenue to pay the military, pay the elected officials, and pay off the debt. They should all also agree to a constitutional amendment to balance the US budget each year. No more deficit spending. No more living beyond our means - as a country, or as a citizen!
The government should institute a Flat Tax, or a Fair Tax (consumption tax). This would give initial money back to the people 100% - allowing more money to exist in the free market for investment, consumerism, or savings. This Fair or Flat tax would also include Corporations. Eliminate unnecessary taxes on businesses, offering incentives for business to come back to the United States. In doing so, with a larger tax base, even at a lower tax rate, the income to pay down the debt and run the bare-bones government would increase.
Let the bad businesses fail. The need will still exist for companies to develop and fill the void. Instead of backing a bad investment, let the free market flux weed out poor choices, and encourage innovative Free Market solutions - such as self regulation (or government sponsored, so long as it works) regarding CEO compensation and fraud loopholes that currently exist. If a company makes a bad choice, I should not be forced to bail them out. Let them fail - it re-enforces good business ethics!
Ultimately, if the plan looks like it will be a pay-out, we are stuck with a bigger government, another bureaucracy, less freedom to enter the free market as a start-up (as the Government is now your competition), and a tax burden from which we will never recover!
John McCain and the economic advisers of the far right should do whatever they can to stall the bail-out. The treasury secretary, the President, and the leadership calling for the Nationalization of the economic sector are nailing the coffin of Capitalism in America.
This is a case where we pray that our leadership does what is RIGHT, and not what appears as politically expedient!
Thursday, September 11, 2008
Barstool Politics
For today, say a prayer for and thank a serviceman/servicewoman or a vet. It has been 7 years since our country has had to deal with a terrorist attack. Thank God for "Bad Republican Policy" protecting the Good Ol' US of A.
-------------------------------------------------------------
I received another great e-mail from a friend and recent graduate of the Leadership Program with regards to our tax system. You may find it very entertaining - if not for the fact that it was so true!
The State of Our Tax System:
Suppose that every day, ten men go out for beer and the bill for all ten
comes to $100. If they paid their bill the way we pay our taxes, it would
go something like this:
The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.
So, that's what they decided to do.
The ten men drank in the bar every day and seemed quite happy with the
arrangement, until one day, the owner threw them a curve. "Since you are
all such good customers," he said, "I'm going to reduce the cost of your
daily beer by $20."Drinks for the ten now cost just $80.
The group still wanted to pay their bill the way we pay our taxes so the
first four men were unaffected. Th ey would still drink for free.
But what about the other six men - the paying customers? How could they
divide the $20 windfall so that everyone would get his 'fair share?' They
realized that $20 divided by six is $3.33. But if they subtracted that
from everybody's share, then the fifth man and the sixth man would each
end up being paid to drink his beer. So, the bar owner suggested that it
would be fair to reduce each man's bill by roughly the same amount and he
proceeded to work out the amounts each should pay.
And so:
The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).
Each of the six was better off than before. And the first four continued
to drink for free. But once outside the restaurant, the men began to
compare the ir savings.
"I only got a dollar out of the $20,"declared the sixth man. He pointed
to the tenth man," but he got $10!"
"Yeah, that's right," exclaimed the fifth man. "I only saved a dollar,
too.
It's unfair that he got ten times more than I!"
"That's true!!" shouted the seventh man. "Why should he get $10 back when
I got only two? The wealthy get all the breaks!"
"Wait a minute," yelled the first four men in unison. "We didn't get
anything at all. The system exploits the poor!"
The nine men surrounded the tenth and beat him up.
The next night the tenth man didn't show up for drinks, so the nine sat
down and had beers without him. But when it came time to pay the bill,
they discovered something important. They didn't have enough money
between all of them for even half of the bill!
And that, boys and girls, journalists and college professors, is how our
tax system works. The people who pay the highest taxes get the most
benefit from a tax reduction. Tax them too much, attack them for being
wealthy, and they just may not show up anymore. In fact, they might start
drinking overseas where the atmosphere is somewhat friendlier.
For those who understand, no explanation is needed. For those who do not
understand, no explanation is possible.
This story is attributed to : David R. Kamerschen, Ph.D. Professor of Economics University of Georgia
-------------------------------------------------------------
I received another great e-mail from a friend and recent graduate of the Leadership Program with regards to our tax system. You may find it very entertaining - if not for the fact that it was so true!
The State of Our Tax System:
Suppose that every day, ten men go out for beer and the bill for all ten
comes to $100. If they paid their bill the way we pay our taxes, it would
go something like this:
The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.
So, that's what they decided to do.
The ten men drank in the bar every day and seemed quite happy with the
arrangement, until one day, the owner threw them a curve. "Since you are
all such good customers," he said, "I'm going to reduce the cost of your
daily beer by $20."Drinks for the ten now cost just $80.
The group still wanted to pay their bill the way we pay our taxes so the
first four men were unaffected. Th ey would still drink for free.
But what about the other six men - the paying customers? How could they
divide the $20 windfall so that everyone would get his 'fair share?' They
realized that $20 divided by six is $3.33. But if they subtracted that
from everybody's share, then the fifth man and the sixth man would each
end up being paid to drink his beer. So, the bar owner suggested that it
would be fair to reduce each man's bill by roughly the same amount and he
proceeded to work out the amounts each should pay.
And so:
The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).
Each of the six was better off than before. And the first four continued
to drink for free. But once outside the restaurant, the men began to
compare the ir savings.
"I only got a dollar out of the $20,"declared the sixth man. He pointed
to the tenth man," but he got $10!"
"Yeah, that's right," exclaimed the fifth man. "I only saved a dollar,
too.
It's unfair that he got ten times more than I!"
"That's true!!" shouted the seventh man. "Why should he get $10 back when
I got only two? The wealthy get all the breaks!"
"Wait a minute," yelled the first four men in unison. "We didn't get
anything at all. The system exploits the poor!"
The nine men surrounded the tenth and beat him up.
The next night the tenth man didn't show up for drinks, so the nine sat
down and had beers without him. But when it came time to pay the bill,
they discovered something important. They didn't have enough money
between all of them for even half of the bill!
And that, boys and girls, journalists and college professors, is how our
tax system works. The people who pay the highest taxes get the most
benefit from a tax reduction. Tax them too much, attack them for being
wealthy, and they just may not show up anymore. In fact, they might start
drinking overseas where the atmosphere is somewhat friendlier.
For those who understand, no explanation is needed. For those who do not
understand, no explanation is possible.
This story is attributed to : David R. Kamerschen, Ph.D. Professor of Economics University of Georgia
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