Friday, September 19, 2008

Don't Know Much About Economics

I don't understand much about the economy, but I know that if I make bad decisions with my money and go broke, the government is not going to step in and take away my debt and make that debt someone else's responsibility. Isn't that what is happening now? The banks that have made bad decisions are being "bailed out" and the taxpayers are now responsible for that debt. This doesn't seem right to me.

Also, if the feds are creating all this new money that the government is going to use to "save the markets" (that's how I heard it on TV), doesn't that create inflation? So we taxpayers are now responsible to pay this debt with money that we have to work harder to get and that now won't buy as much milk as it used to?

I'm sorta scared, and I'm not sure how scared I should be. They didn't teach me enough about this in school.


Michael Kear said...

I think you are right on in your thinking. We either bear the pain now or bear it later. The interventionist government is just putting off the pain for a while as they socialize everything they can get their hands on (at our expense, of course)!

JMG said...

So maybe the middle class will just die a slow, painful death rather than being killed off quickly.


Tony Arnold said...

Absolving people and business of the consequences of their actions is bad in any situation.

Putting that burden on those who made good decisions is worse.

You know much about economics. It is the idiots who think they do that don't.

And politicions worry about short-term opinion, not long term solutions. Therefore the take action to make it look like they are doing something to save everyone without regard to the real effect, which is usually bad in the long term.

I could go on and on, but I won't. But you can bet we will see more Sarbanes-Oxley type legislation which is reactive and just adds a huge burden of cost to businesses who were honest and have good practices. These huge added costs only reduce benefits to employees and raise prices to customers. Inflation!

JMG said...

Inflation is the thing I'm most worried about. I wonder how much inflation we're going to see, and how quickly we'll see it.