Listen to the Apache
January 7, 2010
The Apache crouched, staring at the unblemished sand in front of them. After a while, the white man wondered if the trail was lost.Sometimes we need to step back, regain perspective, and remember the basics. In politics, for instance, people argue about tax increases vs. national debt vs. inflation. Candidates for public office will base entire campaigns on that subject, promising to “balance the budget” by raising taxes.
“What if he left no tracks?”
“There are always tracks,” replied the Apache. “A man can't exist without leaving sign.”
“What if he covers up his tracks? Then what?”
The Apache turned his head and looked up at the white man standing next to him. “That, too, would be a sign.”
They might as well promise to lose weight by standing on one foot.
People involved in this argument should step back for perspective and remember basic economics: as far as our wallets are concerned there is no difference between government spending financed by taxes, by borrowing, or by printing money.
Candidates who run for office promising to balance the budget by raising taxes are either trying to mislead us or have been misled themselves… which makes them either dishonest or ignorant. They deserve our votes in neither case.
Circling back a ways to look at the area from a distance, the Apache noticed the white man hadn’t moved. The way he stood, a certain stiffness of posture, told the Apache everything. Walking forward, he stopped behind the white man and said, “Raise your right foot and let me see.”How the government gets money to spend is a distinction without a difference. To illustrate, pretend you have your very own country where you live all by yourself – let’s call it Obamaland. Pretend that you earned 100 Obamadollars last year and life is good because 100 Obamadollars is exactly what you need to feed yourself, clothe yourself, house yourself, and invest modestly in the business which is you. Given that investment, you hope to earn even more this year.
“How did you know?”
“By the way you stood.”
“I’m sorry. I noticed too late, just as I was stepping on it. I’m afraid I’ve obliterated it.”
“Don’t worry, the sign is still there.”
But suddenly a man points a gun at your head and says you owe him 50 Obamadollars. That’s called taxes. Your purchasing power has been cut in half, and depending on the cost of food, clothing, and housing, you may have to forego any investment in the business which is you.
Oh well, that’s life, right? Illegal immigrants need healthcare, Wall Street needs a bailout, and Barney Frank needs to get reelected, so stop whining.
The thug who pointed the gun at your head didn’t have to get his money that way. He could have issued Obamaland Treasury Notes and borrowed the money. Borrowing seems more polite until you read the actual words on the notes. The words say, “I, Thugocrat-in-chief of Obamaland, promise to pay the holder of this debt instrument 50 Obamadollars plus interest next year, and I will do this by sticking a gun in the face of the same dumbshit who thinks he got off scot-free this year.”
Said dumbshit being you, of course. Obviously, your wallet takes the same hit when the government borrows as when the government simply taxes you. Maybe worse because there’s interest to pay.
Now pretend the thug gets really sneaky. He doesn’t stick a gun in your face this year or promise to stick a gun in your face next year – instead, he sets up a printing press and makes himself 50 crispy-new Obamadollars. Voila! He has his money and never needed to commit armed robbery.
Trouble is, Obamadollars have no intrinsic worth. They’re merely paper with ink on it. Money is only ever worth the wealth which it represents… and the only wealth in Obamaland is what you created with your work. Since no extra wealth was created by printing new money, the 150 Obamadollars now represent your year’s work and you only have 100 of them. The purchasing power of your Obamadollars is now worth only 2/3 of the year’s work – the thug stole 1/3 of your earnings in such a sneaky way that he hopes you won’t even realize it happened. You’ll go to the store, wonder why the prices are so high, scratch your head in puzzlement, silently curse China and the labor unions, buy less than you wanted, and then go home and drink your ulcer medicine.
That’s called inflation. Inflation is nothing more than your earnings being stolen by a thug who doesn’t want you to know he’s doing it.
But wait, that theft of 1/3 is only the beginning. Next year, even if the thug and his printing press disappeared into an interdimensional wormhole there would still be 50 extra Obamadollars floating around, diminishing the purchasing power of your money. They’ll be there the year after that, too. They’ll always be there.
Inflation is a thief that keeps on stealing from you.
Through the magic of mathematics we can graph the effect of printing money and show that when a government prints money the long-term effect is exactly the same as simply taking it from you (taxes), or selling debt instruments (borrowing). In the terminology of a certain hazily-remembered 1972 calculus class, the curved line representing cost of inflation is asymptotic to the straight line representing cost of taxes. Which means, in plain English…
There is no difference between government spending financed by taxes, by borrowing, or by printing money. Whatever the government spends, it comes out of your wallet one way or another.
Any politician who pretends otherwise is a liar or an idiot.
Lying on their bellies, they looked down the slope at the man they’d been tracking.
“I’m still puzzled about how you do this,” said the white man. “It seems like magic. How did you know he was here?”
“You think tracking is done with the eyes, but actually it’s done with the mind.”
“Hmph. That mystical crap doesn’t tell me much. How did you know I was standing on a footprint back there, and how did that footprint tell you he was hiding in these rocks?”
The Apache was silent for a minute.
“Men don’t fly, so I knew there was a footprint somewhere. Since it wasn’t anywhere else, you had to be standing on it. Your posture told me you were embarrassed and putting more weight on your left leg, so I knew the footprint was under your right foot. From that spot the man we were hunting could jump to a rock, and from that rock reach another rock. A man would not step from rock to rock unless he knew he was being hunted, so I thought about where a hunted man would go and there was only one good choice.”
The two of them were silent then, watching, until the Apache eventually rose and started walking away. The job he was hired for was done. He paused after a few steps and spoke without turning his head.
“Everything a man does in the world leaves tracks, and his attempts to hide them can tell you more than the tracks themselves.”
From Reno, Nevada, USA
January 23, 2010 - This is what I have been trying to tell people for years. What good is having money in the bank when the government decides to print more thereby reducing the value of what you have already saved? When you reduce my purchasing power by devaluing the dollar you in a unrefutable sense are stealing from me. Sound financial good sense and sound decision making techniques are the only things that can repair damage to a financial situation. Could you imagine me (a single mom) helping my financial situation by borrowing? Stealing? Printing money in my basement? Taking it from my neighbors? NO, in order to heal my financial wounds I must work, earn and recieve compensation for my efforts which in turn will cure my financial woes. Borrowing puts you behind the interest, late fee, over draft fee eight ball. It is a pit that one rarely escapes from and if you don't believe me look at WA D.C.. The politicians have now fallen into the oldest trap in the world. Debt! Like I have told my child and his children. If you don't have the money to pay for it in full then you CAN'T AFFORD IT! And if you can't afford it then you shouldn't make the purchase. I for one am sick and tired of Congress writing bad checks and then expecting me to cover them. Including interest, penalties and the fines associated with irresponsible handling of money. If congress wants to borrow money fine, then let them pay the interest out of their over the top unwarranted salaries! Money should only be borrowed when it is an absolute emergency. Money should never be printed arbitrarily as it devalues the dollars that are already out there. Raising taxes in order to continue a drunken sailor in port spending habit is also irresponsible and damaging to the economy as it takes expendable cash out of the market place thereby creating a crash so to speak. Doesn't anyone in Congress own a calculator??? I have said enough for one rant. - LiAnne, Connecticut