The Random Comic Strip

The Random Comic Strip

Words to live by...

"How beautiful it is to do nothing, and to rest afterward."

[Spanish Proverb]

Ius luxuriae publice datum est

(The right to looseness has been officially given)

"Everyone carries a part of society on his shoulders," wrote Ludwig von Mises, "no one is relieved of his share of responsibility by others. And no one can find a safe way for himself if society is sweeping towards destruction. Therefore everyone, in his own interest, must thrust himself vigorously into the intellectual battle."

Apparently, the crossword puzzle that disappeared from the blog, came back.


Saturday, February 15, 2014

OPM


You know, if you say the three letters in the title, it sounds a lot like "opium." Which is appropriate, I suppose, because using OPM is addictive. By "OPM", I mean "Other People's Money."

Margaret Thatcher once said,  "The trouble with Socialism is that eventually you run out of other people's money."

Our current president seems happily addicted to OPM. He doesn't seem concerned about the rapidly increasing debt and sees no problem with continued spending. His latest example of  largesse is his executive order increasing the minimum wage of those working for the federal government, and for government contractors, to $10.10 per hour.  Who could argue with that? Working people deserve a living wage, don't they? Except, of course, that isn't really one.

Who will pay for that increase? You, if you pay income tax. And your children and your grandchildren and their children. The contractors won't actually pay it, they will just bill the government for what are called "cost overruns" and the federal employees are, of course paid by you.

At some point, it will all fall apart. The debt will will destroy the country. Prior to that, it will trigger something called "hyperinflation." We have not seen this yet. Not even in those days of 16% VA loans. Remember? The "malaise" of Jimmy Carter? The high interest rates coupled with high unemployment? It is out there, on the horizon, and moving closer every day... only much, much, worse than the late 70's.

Our national credit card is beyond maxed out. We just raised the debt ceiling again. Debts eventually have to be paid, though, and when we can no longer even just pay the interest on our debt, the misery will truly begin.



2 comments:

Tom Sightings said...

A logical point. However, I've been hearing this line of thinking my whole life, and it's never happened. Which makes me think either 1) It could still occur sometime in the future, we just haven't hit the breaking point yet; or 2) There's something else going on economically that isn't accounted for in this reasoning. So either you're right; or Bernanke and Yellen are right. I worry that you're right; but hope that Bernanke and Yellen are right.

Douglas said...

This is economics coupled with politics, logic has no place in this.
there's something I have noticed since the days of Greenspan; the Fed Chair mumbles something and the market reacts. Over the last 4-5 years, if the Fed Chair mumbles anything that might be interpreted as shutting off or reducing what is called "quantitative easing", the market panics a bit and stocks drop in value while bonds gain. When the Fed backtracks and says that is not going to happen, the market rallies. I would like to know what the Fed Chair is going to say before the market opens. Or maybe a crystal ball... one or the other.