Economics 1.0 in a closed system
Early in 2009, back in the days of the $787 b Stimulus and the $400 b Omnibus Bill (two months after the Stimulus), Obama was arguing for his excessive spending philosophy in which he said , "All government spending is stimulus."
My first response to this bit of Left Wing genius was this: "So, why isn't George Bush the spending hero of the Lefties?" They did nothing but complain about his spending and, now, they want you to believe that "spending" is the mark of financial genius.
All government spending is stimulus? Actually, that statement is so far off the mark that it borders on stupid wrong. Think about it. Every single dollar the government spends is taken from the taxpayer. Understand that there is a difference between "propping up an economy" and "driving an economy."
The truth in all this Leftist Keynesian confusion is this: all non-government spending is stimulus. Quite frankly, even this last statement is not exactly true, but it is much closer to reality than the idiocy of the Obama statement. Understand that these people, the Lefies, believe that unemployment benefits are both a jobs creator and a economic stimulus. With that in mind, it should not be much of a surprise to hear of the spending declaration.
Look, if we think about it, the only true and unfettered stimulus is money spent from earned income. That leaves the government out of the mixed altogether because all of government income comes from taxation at some level. For the sake of this post, taxation is not "earned income." It is an assessed gift from the people to their government. It is necessary and legal, but it is not stimulus precisely because it takes money out of the economy.
The continuing health of this country has to include an increase in product production sold to folks outside our realm of influence. That is the kind of income we have in mind.
Take a family unit and a substantial financial gift belonging to that family. The administrator is the Dad, in this example. The son and the mother work for the "family" and are paid out of the Gift Amount. The mother buys the food and runs the affairs of the household. The son mows the lawn and takes care of the estate . . . . . and the father? Well, he is the administrator.
With this illustration in mind, I ask you this: is this a sustainable situation? Will not the family run out of money in due time? Of course. Now, the family can forestall disaster by taxing the two members of the family who perform services. The Dad can order the mother and the son to cut expenses and return a portion of their pay, but, it is clear that if nothing changes in this scenario, the family is headed for financial ruin when the Gift Source is fully expended. What needs to change? Seriously. Stop and ask yourself this question.
My answer is this: someone in the family needs to earn an income from outside the family. Someone needs to bring money into the family coffers from entities that are not considered family, from sources that are in addition to the Gift Amount.
About Obama's speech this afternoon
This afternoon, Obama will make an appeal for increased taxation on one of the family members -- the rich one. His solution to the current distress will be to continue to raid the family treasure. Certainly he will talk about jobs, but he will offer no specifics except to say, perhaps, that he is looking to pot-hole repairs, increasing the weather stripping industry, creating the most efficient windows in the world -- all of these solutions were presented by Obama in the spring of 2009 and are as laughable now, as they were then.
You will hear Obama speaking of "Armageddon," and "crisis." He will pretend to be the "man in the middle" as relates to continued bickering between the GOP and the Democrats. He will speak of returning to the greatness of this country, of shared responsibility and taxing the rich (those who make more than $250,000 a year). He will include promises that cannot be met and, in the end, offer a speech that, in its totality, will be fairly worthless.
Understand that all economic systems are closed systems whether a family, a city, a county, a region, a nation, an international union, or a world. In order for a particular system to survive, it either needs to bring in money and/or product from outside itself (from other closed systems) or suffer the bursting of a "bubble." There are no other possibilities. Because the importing of revenues from other systems always come from other "closed" systems, there is a limit to this solution. Time wise, these limits may take decades to reach, perhaps hundreds of years. The only economic scenario that is "forever" is this: growth and collapse. That's it. The stock market functions within a closed system. Currently, the Fed is printing tons of dollar bills and the Market is loving it. But, in time, there will be another "bust." Such is cyclical and without any possible alternative resolution -- all because we live within a set of closed economic systems, each dependent up on the revenues and produce of the other.
When Obama promised that his financial solution (called Fin Reg - for Financial Regulations) passed into law in 2010, would see to it that the Stock Market never have another collapse, he was just being silly. He can no more "fix" that problem than he can stop breathing and claim to be alive.
But, this afternoon, he will pretend that he knows best what to do. He will demonize the Republican solutions and, with this speech, move further into the river of Irrelevancy.
Good for him.
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