Today’s Skousen CAFÉ features a guest column from investment writer Dennis Miller, while I am attending and speaking at the San Francisco MoneyShow. His column on Big Brother spending by the Federal government is right on target, and very much in keeping with our theme at next year’s www.freedomfest.com, “Is Big Brother Here?” Also, be sure to read my “You Blew It!” column, which I wrote before leaving for the show.
– Mark Skousen
My grandfather was named William Smith, and he was about as common a man as his name implies. He was an army sergeant in World War II, then came home and ran the family farm when the war was over. I doubt he ever heard of Keynesian or Austrian economic theories, but his words of wisdom made it clear just where he stood.
His advice and opinions were more of the commonsense variety:
Big Brother promotes an entirely different way of living. Government leaders tell us an economy based on spending is the key to economic health and happiness. The more you spend, the more jobs are created, and the happier we are as a society. Even if we’re spending borrowed money, that is okay. It is our civic duty to just keep spending for the good of all.
Whenever there’s an economic slowdown, our glorified government leaders increase the government deficit and pump money into the economy. Why? To prime the spending pump and get our economy going once again.
The real result may be high inflation and unsustainable government debt, but economists are hell-bent on maintaining that their theories are correct. They keep saying the government is not spending enough and laugh in the face of common sense.
The U.S. government has missed the boat for quite some time, and it makes little difference which political party is in office. The spend-spend-spend program never seems to work.
You probably remember receiving a Bush tax rebate check back in 2001. The rebate checks were supposed to “give families a break” and “help stimulate the economy.” The rebates were the result of retroactive tax legislation and returned $38 billion to American taxpayers. Hey, I’m all for lower taxes, but when Walmart started advertising that it would happily cash the checks — ranging from $300 to $600 a pop — right at the checkout lines, something sure seemed fishy. Home Depot took it one step further: it offered customers credit based on the expected amount of the rebate. Wow, I wonder what my grandfather would have thought about that.
The rebate checks were an elaborate way to get Americans to spend $38 billion. They were supposed to get our economy going again. They were supposed to create jobs and an income tax base that would more than offset the $38 billion — plus whatever it cost to administer the rebate program (I won’t even wager a guess).
Real People Are Headed in a Different Direction
As Big Brother economists see it, when times are tough, you just go ahead and spend at a faster pace. They claim spending makes everything okay. Since the 2008 recession began, the federal government has stepped on the accelerator and added $7 trillion to the national debt. At the same time, unemployment is still close to 8%, and the number of people on food stamps has more than doubled.
“Three-plus years into a recovery from the worst financial crisis since the Great Depression, Americans are finally getting their finances back into shape, Federal Reserve figures show. Household debt as a share of disposable income sank to 113 percent in the second quarter from a record high of 134 percent in 2007 before the recession hit. Debt payments on that basis are the smallest in almost 18 years, while the delinquency rate for credit cards is the lowest since the end of 2008.”
This isn’t the first time regular folks have said “no” to spending and “yes” to common sense. As it turns out, when CNN/USA Today conducted a poll on those 2001 tax rebates I mentioned earlier, 79% of respondents planned to save the money or use it to pay bills.
Why Isn’t Trillion-Dollar Spending Working?
So, with Big Brother dumping trillions of dollars into the economy, why isn’t it rapidly improving? With all the high-priced economists the government has on hand, you would think one of them would look back to the Kennedy investment tax credit. If you are going to use our tax dollars to stimulate the economy, spend our tax dollars after businesses have spent the money and created jobs. Don’t spend the money first and hope it will work.
(As an aside, I would like to whisper to the National Security Administration (NSA) employee assigned to read our stuff: Don’t give the money to banks. Give it to businesses for having already created jobs. Please steal this idea and take it to your boss. Maybe you will get a bonus for saving our country trillions of dollars.)
My grandfather would likely question whether politicos really believe the spend-spend-spend economic theory at all. He would contend it is simply more fun to spend — other people’s money in particular — than it is to save.
When it comes to business and each of us as individuals, we are more in line with my grandfather. He would have just called it plain old common sense: “No dang theory about it at all!” When times are tough, you get out of debt, stay out of debt and save your money, because you just never know when you might need it.
While my grandfather has been dead for a couple of generations, let’s hope somewhere in this country there is another William Smith who can get to Washington, use some common sense and get things straightened out. In the meantime, when it comes to personal finances, whom are you going to listen to, your grandfather or Big Brother?
Frankly, I’m inclined to believe my grandfather, especially now that Big Brother is doing all it can to actually hurt those of us who have worked hard and saved our whole lifetimes. Rising debt, currency devaluation, increased taxes, unfunded entitlement programs, and near-zero interest rates are punishing savers. These factors have collided to force us into taking greater investing risks just to try to stay ahead.
I receive a lot of email from my readers asking for advice on what to do. We cover a lot of their concerns in my newsletter, Miller’s Money Weekly, and now we’re going a step further.
Next month — on Sept. 5 to be exact — we’re bringing together a blue-ribbon panel of experts that will analyze the challenges retirees and soon-to-be retirees face in today’s economy and markets, and will present sound financial strategies to make your money last as long as you do.
Our experts include: John Stossel, former co-anchor on ABC’s 20/20 and now the host of Stossel with Fox Business Network; David Walker, former Comptroller General of the United States; and financial planning expert Jeff White, president of American Financial Group.
There’s no cost to attend this online strategy session. However, the initial response to it has been overwhelming, so we do ask that you preregister to reserve your spot. Just go to americasbrokenpromise.org today to find out more and to save your spot.
You Blew It! SUPPORT YOUR LOCAL POLICE — NOT!
by Mark Skousen
Editor, Forecasts & Strategies
“To police, civilians are citizens to be protected — to the military, to be subdued.”
– Wall Street Journal
I’ve noticed a serious change in police departments over the years. A couple of decades ago, the local police were there to protect us from harm, or give us directions if we needed help. They were good citizens who had manners and deserved our respect.
But more and more, they are becoming ill-mannered militant bullies to be avoided, if possible. I well remember the time my daughter was arrested in Orlando a decade ago for throwing a water balloon out the car window. It was a harmless prank, but the police arrested her, handcuffed her, swore at her repeatedly and impounded her car. The Orlando police treated my daughter like she was some kind of violent gang member. (Fortunately, all charges were dropped, but only after we hired a high-priced lawyer.)
I recently read a story about the Miami Beach police using a Taser to subdue a skateboarder who was spotted spray-painting graffiti on an empty fast-food store. The police were seen high-fiving each other after they subdued him. Tragically, the skateboarder, Israel Hernandez, 18, died from the Taser attack.
I also read in Radley Balko’s new book, “Rise of the Warrior Cop,” that this militant ill-bred change in local police departments is happening systematically in the United States. Balko has written a whole book on the “militarization of America’s police force” due to the increasing war of crime, drugs and terror. He points out that every major city in the United States now has a SWAT team, and they were always itching to do something — so they enter people’s homes to go after illegal poker games… enter businesses that may have hired illegal immigrants… or even barbershops for violating building codes. Recently, the mayor of Berwyn Heights, Md., was mistakenly arrested by a SWAT team.
More and more, crimes are being committed not by citizens, but by our public servants.
To read the Skousen CAFÉ from last week, please click here. You also are welcome to comment in the space provided below.