Thursday, November 11, 2010

Only So Much Money

Sometimes we need to remind ourselves how the world works. Governments that continue to print money only devalue it. So in a stable government there is only so much money available. If you don't have enough you borrow it. Our National Debt now is pretty big, about $45,000 EACH! The interest on this debt represents $4 of every $10 that the government collects in taxes. ONE of the things that has gone wrong in our economy (there are many) is that money is NOT being circulated. The richest 2% are wealthy beyond most of our abilities to count, controlling almost 50% of the money. This would not be a bad thing if they spent it but one can have only so many yatchs and private aircraft. This "trickle down theory" although maybe not fair has worked to a degree in the past providing jobs to the boatbuilders, their repairmen, the sales people, etc. ALL of these tradesmen down the line paid taxes and in turn bought smaller boats and took their families on vacation, bought Christmas presents, etc. This further provided more work to others. The problem is when one has too much money to spend and they just sit on it, often in banks in the Bahamas, causing it to no longer trickle down!
Henry Ford paid his workers enough so they could afford to buy that which they were making. This system worked well so long as 90% of the money available went to 75% of the people. That hasn't happened for awhile. To get the economy "back on track" you need more than a living wage job; you need a surplus, enough to buy and keep this game moving along.
The "2% that control 50%" need to start spending it before it is taken from them. Revolutions never happen when times are getting better.

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