Tooth Fairy Economics

It would be nice if there really was a tooth fairy and you could actually get money from a friendly source for free.  We all recall as a child losing that first tooth about age 6 or so and then magically during the night a dime or today a dollar would show up under your pillow and viola you had money for nothing.  It would seem as though many of those very well educated people with Phd’s in economics advising the current gang in the White House never lost their belief in the Tooth Fairy.  They believe you can get money magically without any pain or effort.   Rather than being a 6 year-old you have to be a voter of a certain favored bloc. If you bought a house you couldn’t afford in the first place with no money down and simply moved in just like a renter and then ran into a cash crunch and couldn’t pay the mortgage then you are just the guy for them.  They want to be your Tooth Fairy.  They will give you money for nothing.  If you own and operate a large auto company and did a really bad job doing it but you have thousands of UAW workers and their pensions on your payrolls, then you are a great candidate for their help and loads of free money under you pillow when times get tight. If you are unemployed and drawing unemployment compensation for a year, then not to worry the Tooth Fairy will come along and give you even more money often at 80% of what you were earning while at work.  Just keep making noise and the Tooth Fairy will show up again and again, especially each time it gets close to an election cycle.  These folks are the ones who seek a job and when offered one often demand that the pay be “off the books” in cash so that the records won’t show they are working and they can get their unemployment and the cash money from their new work at the same time.  That is using the Tooth Fairy and a little savvy at the same time. If you are a teacher, fireman or cop then you have a special place in line with your unions to receive the best of benefits from the Tooth Fairy.  You can work so hard for thirty years then retire at about full pay when you are in your early 50’s.  Such a deal.  There are those who think the Tooth Fairy has a hidden stash of money that is bigger than the sky is blue.   It will never run out. The problem with this public Tooth Fairy is that the money isn’t really free.  It comes from someone else–the taxpayers.  Even when the money extracted from taxpayers isn’t enough the guys in the WH will not be thwarted in their efforts to be the Tooth Fairy, they will just use credit and the printing press to create more money.   But remember that the credit they use is PUBLIC credit, it is our credit they are using.  When the use the printing press they are not creating any new value.  Government does not create anything.  It provides services for the governed.   It is not an “economy”.   The current gang acts like there is an endless stream of money.  They show no concern for ever paying the piper.  The newly minted money that will be printed this year merely devalues all the money you have earned and saved.   There is nothing of worth behind it.   Yes, when the economy is sound and the wheels of industry are churning there is an implied worth to our currency because we and those around the world what something we manufacture or a service we can provide.  But we aren’t making anything new or offering new services or better services.  We are merely printing more money. The Fed is actively pursuing an agenda to use “quantitative easing” which simply means they will buy Treasury bills and notes.  Of course the Fed doesn’t have the trillion dollars to buy them like a private investor or foreign government or foreign bank, so they will literally print the money.  It is phony money to buy them but it makes balance sheets look better.  The Treasury in turn each year is taking money out of the Social Security funds because the US spends more than it takes in and gives the Social Security IOU’s for the money.  Those people who claim the Social Security fund is sound until 2037 are assuming that the IOU’s will be paid with good money when the debts come due.  Some day soon I fear the world and our own people will wake up and realize there is not Tooth Fairy. That this printed paper is just that, printed paper and doesn’t represent any real value.   Even if they believe it has some value will  they believe it has a value equal to the amount owed?  First it will be dribs and drabs of folks not buying more of them and then more cashing them in than new buyers.  The values will plummet and the interest rates soar.  If you don’t think that can happen then you should take a hard look at what happened to the market between the high in ’07 and the low in ’09, it lost 60% of it value.  If you believe it could never happen to Treasuries and the dollar bill then you really do still believe in the Tooth Fairy.  Good luck with that when you try to use the Tooth Fairy as a guarantor on your debts. During the debates at the Constitutional Convention in 1787 there was one State that particularly fought hard for “states rights” against the central government being proposed.  That state was New York.  <a href=”http://www.olcranky.wordpress.com”>www.olcranky.wordpress.com</a&gt;
Excerpt  

 

Revisions

Advertisements

Leave a comment

Filed under business, Economics, government, Politics

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s