Vicious Rants of an Angry Yellow Man

Now there are less than 3 days left before debt ceiling collapse time. I am still waiting to see what the idiotic politicians are going to do. In the mean time I will write what I think of economics and how it relates to our situation right now. This is not a scientific paper and I have nothing to back up my thoughts. So feel free to tear it apart.

First of all I think that it is strange that we say that we make money when we go to work or invest. I mean none of us, except those who work at the mint actually make any money. We just get money from other people for doing work, sell a product or "let our money work for us, whatever that means". So basically money just exchange hands and if money never exchange hands, we never would "make" any money. So in order just to keep the standard of living the same, more money have to printed all the time because the population is always going up and those new babies are going to need money soon! Money is going to be destroyed or lost by wear and tear so more have to be printed. So it seems to me the government will always run a deficit even if the amount of taxes brought in cancels the amount the government pays out.

Now I assume that the "deficit" we have been talking about is only about paying out more than taxes taken in as opposed to printing money due to expanding population etc. But how come we can print more money than say Greece which is in more debt than us? There are many reasons economists give to explain why Greece cannot recover on its own. But the bottom line to me is that the rest of the world trust the U.S. economy and U.S. government. In other words the world thinks that the U.S. still have the best private companies and the most stable government (and the most powerful military). So will this change? Yes, it can but not for many years in the future. This won't change now regardless whether we default on Aug. 2nd. They will still buy U.S. bonds and the dollar will still be the currency of exchange in most of the world.

This does not mean, of course, that the debt is not important. Twenty or thirty years down the line at the rate we are going we could lose our #1 position. If we just raise the debt ceiling and start working for long term solutions we would be fine. We are hurting ourselves by giving ourselves a no confidence vote. Take Moody and other rating services. These people should be put in jail. They missed lowering the ratings of financial firms in 2008 which caused investors and American people billions of dollars and now they have the nerve to threaten to lower the rating of the U.S. bonds? Look, there are no companies and countries in the world that are safer than the U.S. right now because if the U.S. disappears there would be nothing left in the world anyway so how can the U.S. be lower than the highest grade?

The stock market has dropped the last few days. This is due to uncertainty of what may happen. If the world truly has lost confidence in the U.S. the stock market would have dropped much more. Yes, we have to deal with our deficit but this whole charade in Washington right now is doing nothing except show the rest of the world that WE have less confidence in ourselves. The government spending that gets the Tea Party people most upset are entitlements and government salaries and pensions. Yes, these need to be fixed but they are not the reason the economy went downhill in the past few years. No new entitlements have been added recently except Medicare prescription drug program put in by Republicans. Government employment and pensions have not gone up either. The real culprits are the lack of oversight of Wall Street and financial institutions and the 2 wars. Entitlements and government salaries and pensions are like small cuts that would eventually kill us but will take a long time whereas the financial criminal actions are like stabs to our chest that will kill us faster. Now this lack of confidence in ourselves by not raising the debt ceiling, while will not be fatal, will be another stab to the chest. So the Tea party, in trying to stop small cuts, are really putting a larger wound into our body.

OK enough ranting for now. We will see if Washington comes up with anything in the next 2 days. So I will probably write something in the next couple of days. It will likely be more ranting.