Ship of Fools

Former Clinton advisor, Dick Morris, has claimed that when President Clinton was in office, the central bank asked him to stop paying the national debt off so fast from the surpluses which those years generated because of the effect it would have on the economy. Assuming that there were surpluses for a moment, which were only had by robbing Social Security, is this effect possible?

Yes. This is because, again as I have written in previous blogs, the government is not a head of household. The government issues currency by borrowing, so it is logical to hold to the reverse, that if the government does not borrow, new currency is not put into the economy, outside that generated by banks making loans. So then what is the proper amount of borrowing a government should do to keeps its financial ship sailing?

An economy such as America’s can sustain a 3 to 4 % deficit based on GDP for a healthy dollar and to keep the world supplied with the greenbacks it needs as the dollar is the world’s reserve currency. It is also necessary for our economy as it supplies new cash for businesses and for inflationary spending which generates jobs and is used to build roads, bridges, etc. Yet things have gotten out of whack.

This is because of several factors. The government is too big. A good government’s size according to economists is 18 to 19 % of GDP. Currently it is at 25 %. This leads to a government that acts as a weight on small business and the massive regulations such a government always produces has horrible effects too.

This is a reason why you don’t see natural gas filling stations popping up even though it would drop fill ups to the equivalent of $1.80 a gallon. The EPA crucifies anyone who opens these stations with red tape.

The other thing that is hurting us is free trade, which is not free. The sheer stupidity of the arguments in favor of this is incredible. For one thing, when all those dollars leave the country, they have to be printed or borrowed back, or they disappear, causing a recession. This is why the trade deficit is always in the neighborhood of the deficit. This is never taken into calculations by free traders even though it is a tax on those who pay in inflation costs and job losses most, ordinary Joes.

Our ridiculous energy policy is another thing that hurts us. This money spent on energy overseas has to be printed back too or recession or depression loom. And print we must unless people want to freeze and starve to death as coal is still driven to energy plants by trucks using gasoline, as is our food.

Of course, the most egregious aspect of everything we do is our gullibility, if not corruption, in our relations with countries in almost every sphere internationally. We pay the defense of nations as rich as us, are lectured by countries about our deficits who know full well that they are caused by our allowing ourselves to be raped in multi-lateral trade packs when a nation of our stature should only have bi-lateral trade relations and we have countries who have pegged their currencies low against ours for trade advantages across the board for years, which is why we went off the gold standard under Nixon, to lecture us about our dollar’s value.

"Let us be thankful for the fools. But for them the rest of us could not succeed.” Mark Twain

I think you can figure out who the fools are.

By Jeffrey Ruzicka

Jeffrey Ruzicka is a retired executive of a small company that specializes in industrial water treatment. He lives happily with his wife in Western Pennsylvania and is a contributing writer toFinancialJobBank,FinancialJobBankBlog and Nexxt.