so that's the problem...

While listening to a podcast some time ago I heard the following comment: "the economy is suffering from a global savings glut", what struck me as odd was the use of the terms suffering and savings in the same sentence. I can think of many things I (we) suffer from, but a savings glut is not one of them. As I began to ponder that statement a few thoughts stuck in my mind:

• America doesn't save so our suffering must be limited to the effects of other nations saving.
• if we are in fact suffering because other nations saving their money, why?
• aren't we supposed to "save for a rainy day"?

I came to the conclusion that saving is only bad if your entire economic system is based on the expansion (artificial inflation) of money and credit (which ours is), but this is only partially true as someone will eventually benefit from all the spending and end up accruing some savings. In fact this does happen and it has a name: The Cantillon effect after economist Richard Cantillon. It turns out that the people who get the newly minted money and credit first are disproportionately benefited over those at the bottom of the barrel, in other words inflation hasn't set in for the first few recipients of the money (typically the politicallly well connected), however by the time the average citizen receives the money prices have already increased and at best any raise that may come from inflation will be to break even with the already inflated costs. Either the leadership of our country has been incredibly stupid the last 80 years or it was known that through the artificial expansion of credit and money supply, an increasing number of people would become dependent on the government. As it stands right now the primary political parties have no incentive to make the necessary long term corrections, especially if the citizenry remains largely ignorant.

The time for action is at hand, being a passive citizen will no longer suffice. We need to:

1. Learn. Education leads to awareness.
2. Share. Contribute to the knowledge of others.
3. Unite. Together we can stimulate change.
4. Act. 1-3 are irrelevant unless something happens.

-Joe

are gun laws effective at deterring crime? ask the British

what do you think?
-joe

Life's lottery

Warren Buffet once remarked that we (Americans) won life's lottery by being born in the United States, and while it is true we are experiencing significant economic turmoil there are very few places in the world where life is as easy as we have it. I'm willing to criticize the .gov as much as the next guy (or gal) but let us not forget how we got in this situation; we took out the mortgages and saddled ourselves with crippling debt under the delusion that real estate prices would appreciate in perpetuity. We voted for the laws and politicians that made promises of something for nothing. Our elected officials are adept at giving the citizenry what they want (i.e. home ownership for everyone facilitated by easy credit and artificially low interest rates) if not what they need. The truth is the majority of Americans are ignorant and apathetic towards government unless there is "something in it for them", a sad reality that has gradually allowed the founding principles of America to erode beneath our feet weakening the very fabric of our society. Like it or not our government was not designed to provide bailouts, ease the pain of recession, provide you with a comfortable retirement, or to spread "democracy throughout the world", yet all of these are considered by most people as it's responsibilities. We trifled away unconcerned with the goings on in Washington D.C., outraged only when it had an observable undesirable impact on our daily lives. It is our native responsibility to be aware or our governments actions, notions, and plans at all times. It's too easy to blame the government for our current predicament but it's also un-American.

WE ARE THE GOVERNMENT.

We elected them to office, and we are getting what we deserve. Sometimes the truth hurts, and it makes me angry to think how long I wallowed in my own ignorance, followed the madness of crowds, and that I was not instructed from childhood on my responsibilities as a citizen in a republic. What will I, we, you do now?
Changes to our lifestyle will unavoidably need to be made, what we don't yet know is whether they be voluntarily and gradually applied or violently cast upon us? In the midst of these changes it is essential that we allow our rights to be trampled upon to relieve discomfort. We (and our parents, and their parents, and our parents, parents, parents) allowed this to happen; but today, right now we must also decide to make the necessary changes, to plot a new course and to support others interested in doing the same. Our task will not be easy nor our burden light, but then again neither was the revolutionary war that painfully birthed the freedoms we now take for granted.
I'll finish with a quote from Benjamin Franklin: "they that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety".

Enjoy the weekend.
-Joe