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THOUGHT OF THE MOMENT:

 

Freedom,  Prosperity and Peace...

FOREVER.

 

 

 

The Mother of all Economic Problems - 9/2/06

Copyright © August 2006 Paul Mladjenovic. All rights reserved.

 

Before I address the issue of what is the "Mother of all Economic Problems", let's first take a look at some sample news headlines:

 

"America faces massive debt problems"

"Inflation fears grow"

"Energy prices hit record highs"

"Property taxes continue to rise"

"Rising Interest rates may harm financial markets"

"Manufacturing jobs in America go overseas"

"Housing bubble may burst"

"The dollar continues to fall"

"Eminent Domain ruling increases property seizures"

"Social Security needs reform"

"Pension crisis grows for future retirees"

"Illegal immigration becomes major problem"

 

I am sure that you have seen these recent headlines (or something similar). They seem like different issues with different concerns and apparently different causes. Many look at these as a batch of disconnected economic issues and problems that are part and parcel of a modern, complex society. The list is not even complete. They are part of "the problems of Life" along with drugs, pollution, crime, parking tickets, pay toilets, etc etc. Right?

 

Wrong. Very Wrong. All of these economic problems do have the same root cause (the "mother"). This mother either caused the problem directly or took a relatively manageable or minor issue and turned it into a major economic problem. The mother of all economic problems is government. We could make it sound studious and blame "excessive" government but government by its very nature is excessive and problematic. I don't want to expand the point to include matters such as war, terrorism, etc. I believe that government plays a necessary part in defending us in a dangerous world. Therefore, I will try to limit my comments to the general realm of economics. Let's take a closer look.

 

Inflation & the US dollar

In recent decades, consumers and TV pundits have bemoaned "the cost of living". We here about daily expenses for hard-working folks keep rising and that wages are not keeping up with inflation. It wasn't that long ago that the hand-wringing went on and on about how there are fewer and fewer "one-income" households. Politicians wax on pompously about how families need "two incomes now to afford what a single income used to provide". Inflation is simply government printing too many dollars as they chase the same basket of goods and services. Yes, there is a more precise/formal definition but that should suffice.

I realize that some of you (many?) may see this as too radical. The only reason that it is radical because the size, scope & reach of government has grown enormously since the Great Depression. At this point, "tweaking" the problem is much like re-arranging the deck chairs on the Titanic. The economic challenges are growing relentlessly as you are reading this.

                                                                                                                                                                                                                                                 continued>>>>>>>>