Principle #16 - GOVERNMENT SPENDING - THREE AREAS: TAX, BORROW, PRINT.
Spending tax revenue is a less efficient use of capital than individual consumers using that same money to make investments. For example, spending tax money on welfare programs is less efficient than individuals or business using that same money to create job opportunities and make those people on welfare more productive members of society. In addition, when the government borrows money by issuing Treasury Bonds, it creates huge debts that will be passed on to future generations. This is a negative influence on the economy because if there was a massive call on these debts, our country would be bankrupt. Printing money to finance more government programs also has a negative influence on the economy. When you print money, you devalue dollars, which creates fiat inflation because that money is not backed by anything.
Friday, April 10, 2009
Principle #15
Principle #15 - FOR EVERY ONE JOB CREATED IN THE PUBLIC SECTOR, ONE IS DESTROYED IN THE PRIVATE SECTOR.
Principle #14
Principle #14 - WHEN IN DOUBT, DO NO HARM.
If it ain't broke, don't fix it.
These bail outs and particularly the Stimulus Bill is doing harm to an economy that the current administration admits: "We haven't seen a crisis like this before."
They're failing to bring to light that they know if you spend , print, and borrow the amount of money that they have passed through Congress, you create a situation that is perfect for inflation (even hyper-inflation) to occur. The problem for America is the inflation does not immediately manifest itself, so you cannot evaluate failed policies in real time. However, there are real-world examples from history that shows you cannot spend, borrow, and print your way to prosperity. As always, slow and steady economic growth, born from good sound business practices, is the best path to prosperity. There is nothing sound about reckless spending, borrowing over 5% of our GDP, and printing over a trillion dollars.
If it ain't broke, don't fix it.
These bail outs and particularly the Stimulus Bill is doing harm to an economy that the current administration admits: "We haven't seen a crisis like this before."
They're failing to bring to light that they know if you spend , print, and borrow the amount of money that they have passed through Congress, you create a situation that is perfect for inflation (even hyper-inflation) to occur. The problem for America is the inflation does not immediately manifest itself, so you cannot evaluate failed policies in real time. However, there are real-world examples from history that shows you cannot spend, borrow, and print your way to prosperity. As always, slow and steady economic growth, born from good sound business practices, is the best path to prosperity. There is nothing sound about reckless spending, borrowing over 5% of our GDP, and printing over a trillion dollars.
Principle #13
Principle #13 - THE FREE MARKET HAS NOT FAILED, THE GOVERNMENT HAS FAILED.
The Free Market is not a fair market.
The governments latest quest to make sure no large companies fail is really the problem. The government's involvement in everyday market activities is the foundation of the current financial crisis.
For example, when Congress and a Statist(someone that wants the Federal Government to control the individual) President passed the Community Reinvestment Act in the late '70s, they created a dangerous practice of telling banks to make loans to people they would normally turn down due to risk. This, along with a lack of oversight, which is different that a lack of regulation, was a recipe for disaster. The social and economic engineering of left-wing,"big government" elected officials and bureaucrats refused to enforce the regulations that were in place to stop a Freddie Mac and Fannie Mae implosion from happening. As a matter of fact, they encouraged Fannie and Freddie making risky loans because home ownership was at a "all-time high" and more low-income folks were now homeowners. This was also fueled by a Federal Reserve that kept interest rates artificially low. Many people in Washington and on Wall Street knew that there was a brick wall at the end of Easy Street, but it was a case of no one wanting to take the punch bowl away while the party was in full swing.
The Free Market is not a fair market.
The governments latest quest to make sure no large companies fail is really the problem. The government's involvement in everyday market activities is the foundation of the current financial crisis.
For example, when Congress and a Statist(someone that wants the Federal Government to control the individual) President passed the Community Reinvestment Act in the late '70s, they created a dangerous practice of telling banks to make loans to people they would normally turn down due to risk. This, along with a lack of oversight, which is different that a lack of regulation, was a recipe for disaster. The social and economic engineering of left-wing,"big government" elected officials and bureaucrats refused to enforce the regulations that were in place to stop a Freddie Mac and Fannie Mae implosion from happening. As a matter of fact, they encouraged Fannie and Freddie making risky loans because home ownership was at a "all-time high" and more low-income folks were now homeowners. This was also fueled by a Federal Reserve that kept interest rates artificially low. Many people in Washington and on Wall Street knew that there was a brick wall at the end of Easy Street, but it was a case of no one wanting to take the punch bowl away while the party was in full swing.
Principle #12
Principle #12 - IMPORTS ARE JUST AS IMPORTANT AS EXPORTS.
It is always in the country's best interest to have imports from other countries to push you in the direction of your comparative (competitive) advantage. Trade allows you to rise above the levels of self-sufficiency. This pricinple is positive because imports create competition and options which results in lower prices for consumers.
One out of every five jobs are directly related to trade.
Good business: keep American corporate taxes low and tariffs low as well. The winners will be those companies that are the most competitive and the consumers...that's Capitalism.
It is always in the country's best interest to have imports from other countries to push you in the direction of your comparative (competitive) advantage. Trade allows you to rise above the levels of self-sufficiency. This pricinple is positive because imports create competition and options which results in lower prices for consumers.
One out of every five jobs are directly related to trade.
Good business: keep American corporate taxes low and tariffs low as well. The winners will be those companies that are the most competitive and the consumers...that's Capitalism.
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