Sunday, January 18, 2009

Economics 101

Rule #1-Government cannot create wealth.
Rule #2-Printing more money simply decreases the value of existing money.
Rule #3-Always refer back to Rule #1.

Our Government attempts to run as a business.It cannot.The old saying that you must spend money to make money applies in business,not Government.Government is in place to serve it's master-it's citizens.It provides essential services.It runs off from taxes collected and redistributed to the programs which provide these services.That's it.When Government officials attempt to do more,you get what we have today.Massive debt and over-regulation.

Keep it simple.Remember that for every dollar in circulation,for it to have value it must be backed up by a dollars worth of goods or services.That's why you can't simply print more money to fix it.You only water down the existing money supply and decrease the value of each existing dollar.You didn't add any goods or services.This is why Government cannot create wealth.

This is also why any stimulus package is guaranteed to fail.The Government has no money.To spend $825 billion that isn't in the budget,it must put the taxpayers into debt to provide this money.So they have essentially printed off another $825 billion without adding any goods or services to back it up.They have effectively shrunk the economy overall because someday you have to pay the debt and the interest.

Obama and many others who try these schemes are just smoke and mirrors.It really is wealth re-distribution because that's what the IRS does.By taking your taxpayer dollars and shuffling them around to fund Government created jobs and programs.Didn't add 1 cent of wealth to our economy,only burdened us with more debt.

What if our entire economy was worth $100.00 and we had 100 bushels of corn and one farmer to grow them.If I printed off another $100.00 and didn't add any more bushels of corn or any more farmers to grow them,I simply made my original $100.00 worth half as much.I now have $200.00 still backed up by 100 bushels of corn and one farmer.This simple concept in a nutshell is the same for Government.It can't create wealth because it can't print more money without decreasing the value of the existing money.It can't add more bushels of corn or farmers to back up the new money,only private industry can do this.

Government must reduce it's spending to the amount of tax dollars received.A balanced budget.Simple.Get out of the way of private enterprise by eliminating excessive regulations that make it more difficult for businesses to make a profit.Private businesses making profits results in job creation and the economy growing and both businesses and workers paying taxes.This circle just grows with more business,more workers,more growth,more taxes paid.That's how you
collect more taxes to pay for more public services and infrastructure.Not by increasing the debt.Dummies.More to come...

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