David Hines
Bluster's last stand
By David Hines
The two kids at their lemonade stand were surprised one day when a big black car pulled up. They debated about whether it portended a lucrative customer or, with the dark windows, a predator of the type so often discussed on the news.
"Psst! Hey kids!"
"Who are you?", they asked, ready to run yelling for help.
"Barack Obama."
This allayed their suspicions. They'd heard the name from their parents, teachers, and others. The general consensus was that he is an economic miracle worker.
"How's business?" Obama asked.
"Not so good, sir. Nobody has much money."
"I can save your jobs. Just give me a budget to work with."
"How much?"
"What's in the till? That'll do."
Sure enough, with some federal dollars added to their 45 cents of capital the stand began selling "green" lemonade labeled environmentally safe, though the kids had no idea why. There was still little business but the subsidies rolled in. The day the government contractors showed up was a good one; the painter bought four cups and the sign installer bought two. The kids felt rich.
The government audited their books, and found that their lemon derivatives weren't looking so good; the kids were engaging in fraudulent business practices, said the auditors, in that Mom and Dad bought the ingredients. It was determined that the stand would henceforth be majority-owned by the Treasury Department, until such time as the lemon derivatives issue is sorted out.
Then came the orders for "card check." The two, being now employees of a government-owned operation, were harangued by union officials to check, "Yes, we want a union." The officials, being bigger and tougher looking than the school bullies, got their way. The kids' milk money went for union dues.
Last I heard, the lemonade stand had fresh paint and neon signs, but no business. The kids were gone. Perhaps they found the school bullies less taxing.
Early this year President Obama said that if he didn't get the stimulus money we'd have 9% inflation by the end of 2010. Would that we were still approaching that ominous number! Despite the stimulus, we've already exceeded it.
More probably it is because of the stimulus that we've worsened the dire predictions. Contrary to popular belief, money doesn't come from nowhere. What government spends is extracted from other productive uses. Government either competes with other borrowers, or reduces the value of existing dollars by printing more. The more it vacuums out of the economy the less there is for job producers. The bigger and more powerful the DC suction machine, the harder it is for job producers to compete for those funds.
The BIS (Bank for International Settlements), the clearinghouse for the central banks of the world, doesn't believe stimulus is a solution. Those such as Peter Schiff and Gerald Celente who accurately predicted the economic downturn don't believe it. Only self-deluding politicians and voters think that government stimulus is magic.
The current administration is only the latest to sell such sewer water as lemonade. Each round of expenditures invites greater ones to offset the damage done by the previous ones and to keep the bubble inflated. The final bubble waiting to burst is the dollar itself. That's coming soon to a neighborhood near you.
First with car manufacturers and now with the entire economy, we've got some self-proclaimed experts working hard at turning lemonade into lemons.
© David Hines
October 22, 2009
The two kids at their lemonade stand were surprised one day when a big black car pulled up. They debated about whether it portended a lucrative customer or, with the dark windows, a predator of the type so often discussed on the news.
"Psst! Hey kids!"
"Who are you?", they asked, ready to run yelling for help.
"Barack Obama."
This allayed their suspicions. They'd heard the name from their parents, teachers, and others. The general consensus was that he is an economic miracle worker.
"How's business?" Obama asked.
"Not so good, sir. Nobody has much money."
"I can save your jobs. Just give me a budget to work with."
"How much?"
"What's in the till? That'll do."
Sure enough, with some federal dollars added to their 45 cents of capital the stand began selling "green" lemonade labeled environmentally safe, though the kids had no idea why. There was still little business but the subsidies rolled in. The day the government contractors showed up was a good one; the painter bought four cups and the sign installer bought two. The kids felt rich.
The government audited their books, and found that their lemon derivatives weren't looking so good; the kids were engaging in fraudulent business practices, said the auditors, in that Mom and Dad bought the ingredients. It was determined that the stand would henceforth be majority-owned by the Treasury Department, until such time as the lemon derivatives issue is sorted out.
Then came the orders for "card check." The two, being now employees of a government-owned operation, were harangued by union officials to check, "Yes, we want a union." The officials, being bigger and tougher looking than the school bullies, got their way. The kids' milk money went for union dues.
Last I heard, the lemonade stand had fresh paint and neon signs, but no business. The kids were gone. Perhaps they found the school bullies less taxing.
Early this year President Obama said that if he didn't get the stimulus money we'd have 9% inflation by the end of 2010. Would that we were still approaching that ominous number! Despite the stimulus, we've already exceeded it.
More probably it is because of the stimulus that we've worsened the dire predictions. Contrary to popular belief, money doesn't come from nowhere. What government spends is extracted from other productive uses. Government either competes with other borrowers, or reduces the value of existing dollars by printing more. The more it vacuums out of the economy the less there is for job producers. The bigger and more powerful the DC suction machine, the harder it is for job producers to compete for those funds.
The BIS (Bank for International Settlements), the clearinghouse for the central banks of the world, doesn't believe stimulus is a solution. Those such as Peter Schiff and Gerald Celente who accurately predicted the economic downturn don't believe it. Only self-deluding politicians and voters think that government stimulus is magic.
The current administration is only the latest to sell such sewer water as lemonade. Each round of expenditures invites greater ones to offset the damage done by the previous ones and to keep the bubble inflated. The final bubble waiting to burst is the dollar itself. That's coming soon to a neighborhood near you.
First with car manufacturers and now with the entire economy, we've got some self-proclaimed experts working hard at turning lemonade into lemons.
© David Hines
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