Nov. 14, 2010
COLUMBUS: Congress returns this week. Not the one you just elected, the one you just kicked out. They’re back in Washington to finish off bills in the next two weeks that they couldn’t agree on for the past two years. Of course, about 75 of them are there mainly to update their resumes and try to land a job with the Administration.
Congress knew for years about the income tax increase coming due January 1. Republicans say nobody should have to pay more, while the Democrats say only the two percent who pay about a fourth of all our taxes should get stuck with a higher tax.
The whole debate centers on who gets to spend the money. The government says, “Give us your money and we’ll make sure it’s spent. In fact for every ten dollars you give us, we’ll likely spend fifteen.” On the other side, the folks making over $200,000 say, “Leave us alone and we promise to spend it, not hoard it like we’re doing now. We’ll even hire some workers if we can find ones who want to work.”
The Federal Reserve didn’t wait for Congress or the President to act on jobs or anything else. They just went out, borrowed a printing press, and ran off $600 Billion in fresh bills. Now, these bills are real, you can spend them, but they’re going to drop the value of any dollars you’ve got in the bank the same as if they were counterfeit.
The Federal Reserve is telling people who squirreled away some cash, even if it’s barely enough to retire on, that you better spend it because a dollar today will be worth only ninety cents in a few months. But old folks want to put it in something safe, like CDs, and live off the interest. Seems mighty logical. But the Federal Reserve don’t want you to save because they plan to lower the interest rate to zero. Maybe not actually zero, but if it’s half a percent, and you managed to scrimp and save $200,000, you’ll only have $1000 a year in interest to live on.
The old commodity traders saw this inflation coming. They loaded up on oil, corn, wheat, copper, cotton and gold and drove the price of these commodities way higher than a few months ago. We’re paying more for gasoline, but not because it’s worth more; it’s because the dollar is worth less. Let’s hope it don’t go from worth less to worthless.
Historic quotes from Will Rogers:
“An awful lot of people are confused as to just what is meant by a Lame Duck Congress. It’s like where some fellows worked for you and their work wasn’t satisfactory and you let ’em out, but after you fired ’em, you let ’em stay long enough so they could burn your house down.” DT #1980, Dec. 8, 1932
“Now maybe a little shot of printing money would be just what this country needs. They say there’s nothing that will make a guy pull his dough out of a bank and start buying something with it as quick as to know that his dollar is going to go down in value. Well, when money’s going down you want to have it in something besides a bank. So a little scare might have been just what was needed to kind of get things started” Radio, May 26, 1935