Poor Richard’s Report
How to Cut the Deficit
Washington DC is now one of the wealthiest cities in the Nation. It has become a burial ground of would-be welfare professionals.
I wanted to learn more about the velocity of money from the Federal Reserve Bank of St Louis.
The first article I read started off with two “big words” that I never saw before. Looking them up I discovered that they were biological terms. Then the rest of the article was filled with mathematical equations that only a math student working on his doctorate could understand.
Clearly this individual was writing to show how smart he was. Going to the last page I was hoping for a summary. It was there in a complicated formula that would make Einstein hopping mad. No E=MC2.
The velocity of money is an indicator of how the economy is doing. It measures the turnover of money in the system. Lots of turnover indicates a rising economy. A declining line means the economy is slowing down or the doldrums. Right now it is at the bottom which means to me that QE’s, ZIRPS etc. are nothing but hoarding material for the major banks.
Former Chairman Bernanke is famous for his helicopter speech where he foreshadowed an economic collapse. He, the Fed, would go into a helicopter and dump billions of dollars all over the country. Putting the money into the peoples hands would have been the best route I believe because money goes where it is treated best in a free society.
The electorate in its infinite wisdom elected Democrats in both houses and the President. They gave them a Mandate (?) to protect the banks and unions.
We are unable today to redistribute the wealth to all the people.
Schumpeter’s Law of Creative Destruction; where new business replaces dying businesses. Ideal example: the automobile replaces the buggy whip.
The Federal Reserve has too many employees. President Harry Truman was always looking for a one arm economist- so he could not say “on the other hand”.
Simple procedure; fire the ones who are consistently wrong in their guesses. Keep the ones who are basically on target.
The Department of Energy was started under President Jimmy Carter. Oil is higher today than back in 1978. Nice job. I would reduce them by 90% and merge the remaining into the Department of Transportation. Take the monies saved and reduce the taxes on fuel and also set up a reserve fund to pay down government debt when it comes due.
Merge the Departments of Interior, Commerce, and Transportation. This can be done by early retirements, and duplication of staff and jobs.
The monies saved here would replenish the Social Security System by buying Government bonds and holding them to maturity while collecting the interest. That would make the system solvent, and in a few years payments would be able to increase because of the magic of Compound Interest.
Finally, law makers should abide by the laws they pass. The mistaken notion that they deserve the best because they are helping 300 million people is like I deserve more because I am better than you. Balderdash! That they are serving us is an honor we bestow on them. We pay their salaries.
The above should be for all countries and will help all nations better the people and not the politicians.