Friday, June 15, 2012

It's All My Fault

The latest unemployment numbers show the economy is still listless and soft.  First time jobless claims were up again last week and the number of jobs "created" last month were well below what the "experts" were expecting.  (We obviously need different "experts" as they are always "surprised" by how few or how many jobs are created EVERY SINGLE MONTH!!).  And the question is being asked more and more:  Where are the jobs?

We had the Stimulus, we've given businesses tax breaks and yet, few if any companies are hiring.  Well now, economists think they have figured it out:  You and I aren't spending enough.  Lack of demand is the new reason we aren't getting out of this recession (well, that and former President George W Bush).  Too many people are paying off their debt or socking their money away for possible emergencies--instead of blowing every single penny they get (plus taking on additional debt) like we used to do in the "old economy".

This is music to the ears of the Keynsian Economists at the White House.  They can point to these studies and say "This is where the government needs to step in and increase it's spending to replace what John and Joan Public isn't spending.  States and cities need to hire more teachers--even if there are fewer kids to teach--and hire more police officers--even if crime numbers are down--and we need to add more firefighters--even if there aren't more homes and buisinesses to protect."

And that is the basis of the President's jobs bill:  Take on more Federal debt to artificially increase demand until the rest of us "come out of our caves" and join the recovery.  The only problems are that the increased debt has to be paid back somewhere in the future--and at a higher rate than what was borrowed to "stimulate" the economy.  That will mean higher income taxes--and less money to spend in the future.  And the states, cities and school districts taking on the additional staff have to cover the salaries and benefits after the federal funds come to an end.  That will mean higher state income and local property taxes--and again, less money to keep the economy rolling in future.

So I guess those of us practicing sound personal finance practices have a choice to make:  Spend a little bit more now--or be made to pay even more later.  Either way, it will still be our fault that everybody else can't get everything they want.

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