Shutdown, Big Government, Economy, Effects, Causes
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My dear friends! The constitutional Democracy and capitalist economy of United States is scared to death of “federal government” shutdown. This is in a country which by the limits, placed by its constitution, is supposed to have small and limited government. How did we get to the point where a temporary federal government shutdown has become so scary? Of course this is the result of government getting bigger and bigger, in size and authority, for a very long time. Now, we are at a point where it seems impossible to go on without federal government, especially for an extended period of time.
Even president Obama’s notion that the federal government shutdown will trip us into another spiral of recession, is extremely sad and dangerous. How did we even get here? It is very hard for an average American to understand, where the trillions of dollars, spent in stimulus, recovery and QEs are going? What that money is actually doing? Five years later, unemployment is still very high. Finding a job is next to impossible. Wall Street is moving up, up and up. But, there is absolutely no practical relief for an average person. Obama’s campaign financiers are getting richer and richer, every day. His voters keep suffering, though.
Eighty-five billion dollars per month, in addition to all those trillions which are already printed and spent, are showing no obvious effects, except the staggering public debt levels and devaluing money, causing inflation in an already bad economy and stagnant incomes. This tax payers’ money is simply getting dumped into big corporation cash piles and bank profits. All this debt which we and our next generations will have to pay, is doing no good to us. It is really mind boggling to me, why the policy makers do not understand the basic problem in our economy which is the public, private and business debt. In an already bad economy and with limited incomes, most of the income earned by consumers and small businesses is going into debt servicing to banks, which are already receiving lots of tax payers’ money in stimulus, recovery and QEs. Even if government and Federal Reserve spending is the answer to this crisis, the 85 billion dollars a month should be going in paying off the consumer and small business debt. This will ease the pressure on consumers and small businesses, and a larger portion of their income will become disposable and available for spending. Consumers and businesses will purchase more goods and services, increasing the demand. This, in turn, will create jobs. Businesses will hire more people, in order to meet the increased demand for goods and services. Rewarding their campaign financiers has not fixed this problem and will not fix it. The best solution, still, of course, is that government get out of our business and cut spending by shrinking its size and authority.
Key elements which have been pulling down our economy, remain in place. Ever increasing burden of taxes, staggering regulations, wars and government’s continuous interference in our lives like war on drugs and other prohibitions.
It is, also, very important for the financial and other markets to be open and competitive, again. With all tax payers’ money at their disposal, and tightened government regulations, since crisis, the anti-trust activities of big banks and other corporations are at its peak. All the money that they got from government is used to strengthen their oligopolies by killing and buying smaller competition. This has become a huge hurdle in economic recovery. 85 billion per month in Feds spending can also go towards a generous supply of loans and credit to small banks and other business start-ups. Financial crisis provided us a golden opportunity to get rid of all rotten fish, and we missed it. Instead of that government rewarded them, and still is, with huge sums of tax payers’ money. Now, the only way to fix these bad and monopolistic corporations, is by extending and broadening the markets. Increased competition from start-ups will not only create jobs and make disposable money available for economy, but it will also force big banks and corporations to change and improve their ways.
Don’t get me wrong. Government is not solution, it is the problem. We just want it to clean a little bit of huge mess that it has been creating for at least eight decades. As long as the corporate financed politicians are blind towards common folks, and all they can see are the troubles faced by big banks and corporations, these problems are not going anywhere. If they really want to rescue, they have to rescue the people, they got in trouble, because of government’s mess.
Any money provided to pay off the consumer and small business debt, still ends up in banks which needed liquidity. But, in this way, it performs the additional and much desired benefit of expansion of disposable incomes.
Paul Krugman keeps saying that we should continue to sell bonds, because, world wants to buy those. My question is, why does world want to buy our bonds? It is not because they trust our government too much. Our government actually has one of the worst ratings in the world. It is because they trust U.S. economy, and U.S. workers and businesses. How are you going to sell those, if the strength of our economy is badly hurt, in this process? Once that trust is gone, they will not worth more than Nigerian, Greek, Italian, Irish or other worthless government bonds. Even, to be able to sell those bonds, this economy must keep going strong.
I believe, no sane person will disagree with the fact that regardless of the strength of an economy, no one has unlimited borrowing power. Unfortunately, that is what European countries thought. But, they did hit the wall, and we all know that it was bad. No doubt, our economy is much bigger and we have far more strength. But, if it keeps on going like this, we will hit the wall, too. You just cannot raise the debt ceiling, every few months. At some point it will overwhelm the government’s ability to pay, and that will be ugly. We do not want to be there.