Nov 23rd - Political Commentary - Discouraging Thrift

Why is the federal government discouraging thrift? Due to current government policies people who have tried to save a few dollars, rather than blow every cent they have on new toys, are being punished by interest rates that are below the rate of inflation.

I think that there are a couple of obvious reasons. First, the federal government needs the rates held down to ridiculously low levels so that interest on the massive federal debt that they have run up doesn’t seem to be quite as bad. Second, politicians are far more interested in getting re-elected than in the long term fiscal health of the nation. They are willing to do anything if it will entice people to spend more money, thus artificially stimulating the economy. Basically that is what caused the housing crisis. The federal government made it far to easy for people to borrow more than they could afford, and it enticed lending institutions to make the loans because the feds guaranteed them. The end result was that housing prices inflated to unrealistic levels and, when people started defaulting on loans that they should never have had, housing prices plunged downward.

The current prime rate, the rate banks charge for loans to their most favorable customers, is 3.25%. Since 1947 the median prime rate has been 8.75%. Lending institutions can keep the prime rate this low because the Federal Reserve is running the printing presses overtime to pump out more worthless dollars. At the end of last year the Federal Reserved handed out $9 TRILLION in secret loans to banks, at interest rates as low as 0.5%. Lending institutions could care less what we citizens do with our money when the Fed will hand them out money for free, or at worst a token 0.25% interest rate.

By the way, have you had enough “change” yet?  

On 9/30/200,1 the end of the first fiscal year after Bush took office, the national debt was $5.8 trillion. On 9/30/2009, the end of the first fiscal year after Obama took office the national debt was 11.9 trillion. During the eight years of the Bush presidency the national debt increased by a staggering $6.1 trillion (an average annual increase of $763 billion per year).  $2.9 trillion of that occurred during the last two years of his Presidency when the Democrats controlled both the House and the Senate (an annual debt increase of $1,450 billion per year). All of Bush’s big spending during his last two years in office had to have been supported by the Democrats. The Democrats also controlled the Senate during the first two years of the Bush presidency.

The national debt is now over $15 trillion. Based on the latest OMB projections that I could find, in just the first two years of the Obama presidency the debt has increased by $3.1trillion. This occurred with Democrats in control of the Presidency and both houses of Congress. By the end of Obama’s first term in office the national debt is projected to rise to $17.8 trillion (an average annual increase of $1,500 billion). Under Obama the national debt will increase as much during his first term as it did during Bush’s two terms.

Recently the boobs representing us in DC could not even agree to a plan that would cut the projected growth in the national debt by $1.2 trillion over 10 years, when what we need is a plan that will cut it by at least $1.2 trillion per year.

Time to throw all the bums out. Support Civil Libertarians when ever you have the opportunity.