Money

As a country we are spending a lot of money on a lot of things and as a result we end up having big bills to pay just like any other person who spends a lot of money. Now the government raises money in three different ways each influences the way we live and how much money we make and are worth. The first is raising taxes. Natural when the government needs to raise money it can do so by increasing taxes but it can't do so unlimitedly because taxes cause deadweight loss (a term we use in economics to represent the surplus lost that would have arisen if there was no tax). Another way the government can raise money is just by printing more money. This has a side effect though, because the new money doesn't necessarily represent any new value that is added to the economy it devalues all the other currency in circulation. This means the very dollar bill in your pocket is worth a little bit less and has less purchasing power. Critiques sometimes say this is stealing from the middle class. The third and final option that the government can use to raise money is by issuing bonds (an I.O.U). Basically taking out a loan from the public in promise to pay it all back with interest at a later period of time.

So why do I bring this up? Because recently this game of spending money and paying debt has gotten a lot more dangerous. The government is running itself into the ground with the current administration. The war is going to cost about $1.6 trillion, give or take a couple hundred billions, the dependency on government to provide relief and regulation is growing, and the growth of the economy has continue to fall behind the pace of the bigger countries currently developing, China and India most notably. And on top of all of this they want to start a national health care plan? China has been a big buyer of bonds and infrastructure in the U.S they currently own about 1 trillion dollars of our debt. If they called in right now all their debt it would cripple our economy. Basically the government is just getting too big. There are already too many departments and too many proposals that would increase government spending. We have to go back to the system of government when it was unadulterated, back to the founding fathers wisdom when they wrote the constitution. We have gone astray from most of their advice and I believe that we are losing our way. I fear one day we will falter and something bad will happen. Lincoln once said "America will never be destroyed from the outside. If we falter and lose our freedoms, it will be because we destroyed ourselves".

The founding fathers wrote nothing of a central bank when they wrote the constitution and how American should run. They backed the Gold Standard which would keep government spending in check. They understood that the manipulation of currency by an elite group of gentlemen who answer to only the joint economic committee would allow for some terrible human errors and took away from the capitalistic ideals. In fact the market crash of 1929 is a great example of poor policy on the central banks allowing for a depression in the economy. If you don't believe it then ask the current Head of the Federal Reserve Ben Bernanke, he will most certainly tell you (he has done much work on understanding the market crash of 1929).

We have to cut government spending and we have to do it as soon as possible. All these talks of centralized health care plan, and more government spending, and central banking system is far from what the founding father would have wanted. We are walking a tight rope and we must be careful before we confuse good intentions with poor policy.