Archive for the ‘Economics’ Category


10 May

Democrats are back to their old game of pushing spending to the limit and then asking to raise the debt limit to allow them to spend more. You cannot continue spending without limits. The debt limits were passed to force the government to live within its budget. It does no good to keep raising the debt limit so you can continue spending. Democrats are willing to threaten the stability of the country to get what they want. They refuse to accept budget cuts without an increase in the debt limits. It will do no good to make budget cuts to get a raise in the debt ceiling and then return to spending once it is passed which is what they have done over the last fourteen years. President Trump made significant budget cuts without raising the ceiling, but President Biden canceled those cuts and returned to reckless spending. Unless they agree to make budget cuts and retain the current debt ceiling, nothing will change. We cannot continue spending with no end in sight. It has to stop and stop now, or we will continue to face threats of a government shutdown if we don’t keep raising the debt limit.




27 Mar

President Biden continues to take the law into his own hands and use his office to override the will of Congress and the American people. He has used the FBI and the Dept of Justice to harass and threaten former President Trump, conservatives involved in opposing abortions, and parents involved in protecting their children. He has used his office to force federal employees to get Covid shots and to violate State laws by performing abortions and distributing abortion inducing drugs in States that outlaw abortions. He has now pushed through regulations to make millions of gun owners who legally own guns and use them responsibly into criminals if they don’t register their guns and/ or get rid of them. Such regulations will not make our streets any safer, all they will do is tell the government where the guns are so they can seize them if they choose. They claim to be making the streets safer but their regulations have done the opposite. In major cities who have the strictest gun laws, they also have the highest rate of gun deaths because the criminals have guns and do not have to be afraid that those they attack will be armed because the government took the guns away from the general public. All we have to do is compare the results of Presidents like Calvin Coolidge and Franklin Roosevelt to see the results that come from a presidency that allows Americans to shape their own future on the one hand and those that try to solve the problems through government control on the other. For those not familiar with those Presidents, I have posted videos on them on my Facebook and Linked-in pages.




17 Mar

While the bank’s failure resulted from poor management by the bank, it was made worse by government manipulation of the economy. The BTFP provides temporary loans to insure banks can cover deposits so they don’t fail and the FDIC guarantees losses when banks fail, but they are designed to help in a limited crisis during a normal economy. President Trump built up a stable economy and when Covid hit, it created a temporary crisis. President Trump provided stimulus money to help those out of work during the shutdown and used BTFP funds to help banks weather the crisis which was helpful. However, President Biden prolonged the shutdown after the initial crisis was over, prolonging the crisis. In addition, he continued to pour out stimulus money discouraging workers from returning to work. He is still giving out stimulus money. It continues to prolong the crisis. It has also disrupted the economy that was needed to help the banks recover. Banks don’t just put the money that is deposited in a vault and wait for you to come get it. They loan it out at interest to make the money needed to operate with the confidence that it will be repaid before you come to get it. They depend on regular deposits to supply the money they need to loan out. Many  people are using  the stimulus money to live on and delaying returning to work rather than saving it. In addition, with a deteriorating economy and high inflation fueled by massive government spending, depositors don’t have the money to deposit and have reduced deposits to cover their needs, so the banks don’t have the money on hand they need to cover withdrawals. In addition, the federal government has been raising interest rates to combat inflation, so banks are forced to borrow money at high interest to cover loans they have made at low interest. Higher interest rates have also discouraged borrowing so there isn’t as much interest coming in to cover operating costs.




17 Mar

The system has stacked up layers that spread the risk. In a normal economy, one bank may fail, but a regional bank is backing it so it is no problem because the regional banks are dealing with a lot of local banks who can help absorb the loss. A region may be hit by a disaster, but the regional bank is supported by the federal banking system which is supported by all the regional banks. If the federal banking system runs short, they can draw on the World Monetary Fund. It is like an insurance policy. In simple terms, if you have 100 people paying into a policy, and they each pay $100 a month, in 10 months it builds a fund of $100,000. If someone has an accident, totaling $15,000, it is covered by the fund. It is no problem if several have accidents because they can all be covered. It is very unlikely that everyone is going to have an accident. Since people are constantly paying premiums, it is constantly replenishing money paid out in settlements. If there was a hurricane and it wiped out all the cars, the company would have to fold because they couldn’t cover the losses.  That is where the banking failure gets scary.




17 Mar

Funds to help the banks will come from the Bank Term Funding Program (BTFP) which makes short term loans to shore up financial institutions during a financial crisis, The BTFP allows the FDIC to provide additional funds to banking institutions to make sure they have the funds to meet needs of their depositors, accepting collateral not normally accepted. It is backed by funds from the Exchange Stabilization Fund. That includes assets normally considered too risky. It allows the FDIC to trade credits with the U.S. Treasury in order to draw funds. It can also draw Special Drawing Rights from the World Monetary Fund (WMF). They aren’t currency but are a claim on funds held by the WMF.  It spreads the risk. Large banks support small banks with loans to cover their loans, enabling small banks to loan beyond their ability to cover their loans. By guaranteeing all deposits, the government has eliminated the risk, and eliminating the risk has a downside.  Banks are normally cautious how they use their funds to limit their loses, however, without risk, they are tempted to take any risk that will net them a profit.  That is courting disaster.




17 Mar

The shell game continues as President Biden promises to guarantee all the deposits in the failed banks while guaranteeing that no money will come from taxpayers. It will come from the FDIC (Federal Deposit Insurance Corporation) which guarantees losses in case of bank failure up to $250, 000. That fund is supported by deposits made by the banks as insurance premiums in the event they fail. However, President Biden is guaranteeing all deposits, even those exceeding the $250,000 limit so if losses exceed that limit, it will come out of taxpayer dollars. Since small depositors will fall within the $250,000 limit, it is the large depositors that President Biden is benefiting. So essentially, the government is using taxpayer funds to benefit the rich. In addition, President Biden has also made a bold move that may bring down our entire banking system. He has stated that the government will not bail out the banks, but has promised to protect depositors of the failed banks. While bailouts support the bank to keep it in business, guaranteeing deposits is a literal takeover of the banking system, where the government, not the bank handles the banking.




13 Mar

President Biden’s budget is insane. He says that he is going to tax the rich and not the middle class, but it is nothing but a shell game where you try to guess where the money comes from. The rich get their money from corporations they own or investments. President Biden says he is taxing corporations. They don’t print money, they have to earn it through selling products or services. Corporations get the money to pay the increased taxes from increasing the price of their goods or services, which you and I must purchase, or by laying off workers or denying them a raise to cover the increase cost of living. Without pay raises, the paycheck doesn’t buy as much since things cost more, so it is the same as cutting their wages. The budget also includes taxes on stocks and other investments. However, people invest in corporations to get a profit. If there is no profit due to increased taxes, they will invest their money elsewhere. That will mean less money available to corporations to expand their business or upgrade it to keep it competitive. If they can’t compete, they will lose money which will result in more layoffs and maybe closing the business. He says he isn’t taxing the average American, but he really is. He is just doing it in a way that you don’t realize he is doing it.




13 Mar

It is amazing to see the way the present administration is playing the American people. Two banks have folded in the last week and President Biden has stated that the federal government will guarantee depositors  get all their money, but it won’t cost the taxpayers anything. It will be interesting to see where the money comes from because the federal governments gets its funds from the taxpayers. He may think he can just charge it to the national debt but not unless he gets the debt limit raised and borrows the money. Even if he borrows the money, it will have to be paid back sometime and that money will have to come from taxpayers. It is like he thinks the American people gave him a credit card with no debt limit. That is foolish thinking. He is pushing a fantastic raise in the national debt with his budget and says Congress has to raise the debt limit to accommodate the increased debt. Ever since President Clinton began the brinkmanship over the budget, liberals have pushed huge  increases in debt and forced Congress to raise the debt limit to accommodate it by refusing to negotiate on the budget until it comes down to passing the budget or shutting down the government. Conservative representatives feel it is better to accommodate them then shut down the government, so they give in. When I was growing up, that was called blackmail, but apparently they feel it is just politics. We cannot continue to increase the debt limit to accommodate the out of control spending. Americans seem to be blinded by the prospect of getting free money from the government and don’t stop to think that they are the ones providing the money that they receive.





04 Feb

President Biden is proclaiming his  success in restoring the economy by bragging about the large number of jobs filled this past month. However anyone with any understanding of economics knows that this is the time when summer businesses start hiring. It is early yet for northern States like Michigan and Ohio but mid-American States like Kentucky and Tennessee are interviewing to hire. Further South they have probably already got a good number of those they want to hire for the summer. Nurseries, landscaping businesses, and businesses that cater to tourists are beginning to fill out their summer staff. I would be very concerned if there was no big spike in hiring at this time. In fact the number he brags about sounds low to me. The spike in hiring is not due  to his success but to normal seasonal hiring. Just last week I saw a notice about Covid relief money going out to businesses that continued to pay their staff during the pandemic. Those were the businesses like Walmart and similar businesses that were big enough that they could afford to stay open. Many small businesses closed because they were unable to go on paying staff with no business to bring in money to pay the staff with, because the government forced them to close. The government put so many conditions on staying open that the small businesses could not meet them. The big businesses pushed the regulations knowing they could accommodate them but smaller businesses could not. The companies knew it would destroy their competitors and they would profit in spite of the added expense. While the administration stated it was declaring war on the rich and on big business, their policies aided big businesses and forced many of the small businesses out of business. The rich who are heavily invested in big businesses benefited while small businesses and their employees lost out. The American people need to look at the results of their economic policies and understand what is really happening to the economy. They should not be misled by rhetoric which is designed to hide the administrations failures and make it look good.



Government Finances-II-L

12 Jan

No one talks about who is holding the loans of our government. We can only print so much money without fueling inflation. President Obama kept a lid on inflation by borrowing heavily, but that can only be controlled so long. President Trump cut taxes so the economy began to bounce back but if we don’t control the debt, it will drain all our resources. President Biden has resumed the massive spending extensive government giveaways fueling inflation. Liberal politicians continue to push massive spending bills. When we reached our debt limit, liberal politicians pushed to increase the debt limit. It is easy to vote to do it but ignores the fact that we will reach the point where we can’t pay the interest, let alone the principle on the loans. They waited until the deadline where we risked a government shutdown if it wasn’t passed, and blackmailed conservatives into passing it to avoid a government shutdown. That is not how to run a government. The government should seek to find reasonable solutions, not blackmail its opponents to accept unreasonable ones. Another danger is that our creditors call in the loans. If we have a hard time paying the interest, we definitely can’t pay the principle.  China is one of the biggest holders of American debt and can easily use that to get preferential trade agreements and shape American policies in the Far East. The worst part is that China is getting overextended as well and selling the loans to the Arabs. That leaves us vulnerable to manipulation by the Arabs. They know that if they suddenly call in those loans, China would have to call in theirs, and we could not pay them, leaving us open to blackmail or worse yet they could simply shut off the funds which would cause our economy to collapse. Once it does, they can simply walk in and take over. Everyone needs to contact their Congressman (whether Democrat or Republican) and demand they cut spending and try to get the debt under control and in the next election, elect Congressmen committed to balancing the budget.