Tuesday, August 19, 2008
Tuesday, August 5, 2008
Your Presidential Candidate Doesn’t Matter (Subtitle: You’ll Be Worse Off Economically in 2016 No Matter Who Gets Elected)
That’s right – it doesn’t matter who’s elected President of the United States this coming November. At least it doesn’t when it comes to the economy and our present difficulties therein.
I’ve been in various social and professional circles where I hear a great deal of enthusiasm expressed for one candidate or the other. Invariably, I have provided the individuals participating in those discussions with much the same message as you see reflected in the title of this blog entry. As long as a country maintains a central bank that practices inflationary monetary policy, particularly as a tool for resisting recessionary forces, that country will experience growing economic pains, a weakening currency, and a widening gap between its haves and have-nots.
To quickly summarize: when inflationary policies are instituted, and money is created out of nothing, that money flows to entities that can utilize it before its price-raising effects seep into the larger economy. These entities (investment banks, corporations, the wealthy) can invest it or capitalize it in a fashion that is advantageous to them, such as by investing in real estate, stocks, derivative investments (options, collateralized debt obligations), or anything else for that matter. Then when the added money trickles down to the consumer (read: you and I), we are left with one thing: higher prices. Less purchasing power. Smaller paychecks. Whatever you want to call it, it’s not good.
Given the above, here’s a question for you: which candidate is talking about the activities of our central bank in the context of our economic woes? Which candidate has come out denouncing the inflationary policies of the Fed Reserve? Which candidate has advised against resisting the natural, corrective recessionary forces underway in the US market? You guessed it…none of them.
So where does that leave things? Well, it basically means that your economic situation is going to deteriorate over the next few presidential administrations, no matter which one of the candidates is at the helm. The underlying, root cause of our economic distress is not just absent from today’s political discourse -- if it is broached it’s met with mockery, disgust, or apathy (exhibit A: former candidate Ron Paul in any Presidential debate from the last year or so). Worse, our society discourages reading in favor of mind-numbing entertainment, so it is unlikely the masses will independently awaken to the effects of central banking anytime soon. Educating oneself in the area of financial literacy is also difficult, due to the complete lack of outlets for this subject. (Anyone still wondering why our schools don’t teach basic financial literacy?) Efforts in this area are left to the self-directed (see previous comment re: reading vs. entertainment).
Allow me to proclaim with even more emphasis the following: no matter who becomes President – Barack Obama or John McCain – your economic situation will be worse after the presumptive two terms that individual will serve. By worse, I mean some combination of the following conditions: less home equity, devalued investments in stocks and bonds, lower purchasing power, less available savings, more reliance on credit to buy the essentials, you name it. It won’t be pleasant.
I’ve been in various social and professional circles where I hear a great deal of enthusiasm expressed for one candidate or the other. Invariably, I have provided the individuals participating in those discussions with much the same message as you see reflected in the title of this blog entry. As long as a country maintains a central bank that practices inflationary monetary policy, particularly as a tool for resisting recessionary forces, that country will experience growing economic pains, a weakening currency, and a widening gap between its haves and have-nots.
To quickly summarize: when inflationary policies are instituted, and money is created out of nothing, that money flows to entities that can utilize it before its price-raising effects seep into the larger economy. These entities (investment banks, corporations, the wealthy) can invest it or capitalize it in a fashion that is advantageous to them, such as by investing in real estate, stocks, derivative investments (options, collateralized debt obligations), or anything else for that matter. Then when the added money trickles down to the consumer (read: you and I), we are left with one thing: higher prices. Less purchasing power. Smaller paychecks. Whatever you want to call it, it’s not good.
Given the above, here’s a question for you: which candidate is talking about the activities of our central bank in the context of our economic woes? Which candidate has come out denouncing the inflationary policies of the Fed Reserve? Which candidate has advised against resisting the natural, corrective recessionary forces underway in the US market? You guessed it…none of them.
So where does that leave things? Well, it basically means that your economic situation is going to deteriorate over the next few presidential administrations, no matter which one of the candidates is at the helm. The underlying, root cause of our economic distress is not just absent from today’s political discourse -- if it is broached it’s met with mockery, disgust, or apathy (exhibit A: former candidate Ron Paul in any Presidential debate from the last year or so). Worse, our society discourages reading in favor of mind-numbing entertainment, so it is unlikely the masses will independently awaken to the effects of central banking anytime soon. Educating oneself in the area of financial literacy is also difficult, due to the complete lack of outlets for this subject. (Anyone still wondering why our schools don’t teach basic financial literacy?) Efforts in this area are left to the self-directed (see previous comment re: reading vs. entertainment).
Allow me to proclaim with even more emphasis the following: no matter who becomes President – Barack Obama or John McCain – your economic situation will be worse after the presumptive two terms that individual will serve. By worse, I mean some combination of the following conditions: less home equity, devalued investments in stocks and bonds, lower purchasing power, less available savings, more reliance on credit to buy the essentials, you name it. It won’t be pleasant.
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