There is a growing mythology in the United States about money and the “free market”. The GlennBecks of the world have a platform to speak, and have set about aggressively using that platform to spread bad ideas to the people that trust them. The facts about these issues are within the grasp of most Americans, so lets correct the misconceptions now.
- The falling dollar is a disaster. Wrong. The dollar’s value, relative to other country’s money, is not an omen of American doom or the end times. Businesses do not raise their prices when the commodity markets show the dollar trading lower, and a fall in value does not cause inflation. Period. As oil is listed in dollars, a fall in value does make foreign oil more expensive, which is another good reason to end our dependence on the stuff. That, however, is the biggest negative attached to a falling dollar. Inflation is caused by too much money in the system relative to the amount of products available. This is typically caused when the Fed monetizes our debt….in normal English, when they print money to pay bills. Inflation is something we will have to watch over the next few years, but is not now a threat (we have actually experienced some deflation, which is not as good as you might think). So what does the falling dollar do? It makes stuff we make cheaper for foreign consumers to buy, and it makes visiting our country cheaper for foreign tourists. It takes less of their money to buy ours. That is good for U.S. manufacturing and the U.S. tourist industry. It is also BAD for China, which is why they own so much of our debt. You see, the Chinese have been buying up our green to keep its value artificially high. They have done this because it makes THEIR stuff cheaper than what we make at home. If they stop buying our debt, our dollar falls and their stuff becomes more expensive for us to buy. A falling dollar leads directly to a reduced trade deficit, which is a good thing.
- The dollar has no worth, so invest in gold. In my hometown, they would roll out the red carpet for you…Las Vegas knows a sucker when it sees one. When the financial crash happened last year, investors around the world pulled their cash out of the markets and invested in U.S. Treasuries. Despite all the crying in this country, foreign investors still place their trust in the “full faith and credit of the United States government”. That’s us kids. We back the dollar. Still not sold? The dollar has value because we believe it does, whereas gold has value because…..because it is gold. Gold has value because we believe it to be valuable. Its value is just like the dollar’s in that it rises and falls with the whims of the market.
- The United States is going bankrupt. Uhh…no. Ridiculous, breathless, ranting garbage. In the midst of the worst credit crisis since the Great Depression, the United States raised $1 trillion without a hiccup. The debt, as it is constituted now, is unsustainable over a timescale of perhaps two decades. This is not due to the short term investments incurred in the bank and auto sector bailouts as most of that cash will come back. The lack of sustainability is directly related to health care spending in general, and Medicare in particular. It is one of life’s ironies that the same Republicans who have, this year, successfully sold themselves to seniors as “Champions of Medicare”, were hard at work trying to kill the program completely for the previous four decades of its tenure. They tried to kill it because it is incredibly expensive. It is also increasing its expense exponentially, which is why health care reform was championed by BOTH parties before Republicans decided it was a good way to attack Obama. In the meantime, at least, the debt is not a threat. We will spend more than twice as much on our military this year as we will spend on debt service. Ask yourself this question; is there anything in your personal finances or that of your company’s that you spend more on than your charge accounts and mortgages? Didn’t think so.
- Opponents of reform are protecting the free market. It would be comic if it were not so dangerous. First, free markets are VERY good at managing price and production levels. Artificially controlling either, like what we do in welfare programs like farm subsidies, raises prices and hurts the competitive abilities of the players. But these categories are the only in which the free market helps. I think that the performance of financial institutions, automakers, and others recently is sufficient to explain that point. In any case, the insurance market is not a free market. On this topic, I don’t think there are many who would argue against the need for government oversight over the medical marketplace (although there is a very good argument for giving those oversight programs a major face lift!). In terms of economics, the marketplace is, by definition, not free; it has an anti-trust exemption. This is a government license to fix prices, drop coverage, discriminate and otherwise defecate on consumers. That’s us kids. The government is also deeply involved with protecting the firms in the medical marketplace. The patent monopolies awarded to drug companies raise raise drug prices by a factor of ten over the rates of other countries. We pay about $250 billion more per year on drugs than anyone else. Everyone reading this knows how crippling those prices are, especially on our older relatives and friends. This is “government regulation” that NOBODY who is “pro-business” seems to ever mention in conversations that involve “keeping the government out of my medicine”.
- Some people on the cable channel “I” watch are “fair and balanced”. I heard a speech given by President Clinton last year in which he described an opponent’s point as being a “complete load of hooey”. To paraphrase Justice Stewart, I can’t tell you what hooey is, but I know it when I see it. I have yet to find a cable outlet that attempted anything resembling traditional journalism. Some newspapers still try, and the major network news programs are better at it than some folks give them credit for. Mostly though, they are all filled with opinions and talking points only loosely disguised as “panel debates”. If you want good, strong reporting that gives you a complete picture, try watching your local PBS channel. The “Lehrer Report”, “BBC News”, and the newsmagazine “Frontline” all give complete, drama-free reporting at a depth that is leagues apart from the frantic chicken-dance of cable news.
There are a plethora of internet sources that can give clarity to the more complicated political issues that informed voters should be aware of, and all of them are just as easy to gain access to as TMZ or Amazon. A good rule of them to use when researching sites; if the story you are reading sounds like it was written by a politician, ignore it. The simple truth is that the real problems our country faces are complicated and are caused by multiple villains.
Conspiracies are the easy way out. The rational middle encourages you to dig a little deeper and take on an American-style challenge….