It's not often that I blog about a letter to the editor in my local paper. Generally, one person's misinformed opinion isn't worth worrying about. But sometimes, the opinion expressed is so wrong, yet so widespread, that it must be addressed. I'll quote the whole thing here, so you can get the full impact.
[Wisconsin State Journal:]
It amazes me how supposedly intelligent folks can claim that the stimulus, bailout, bribery money is an actual benefit to those receiving it. You read about brain drain out of Wisconsin when it comes to jobs, but what about brain drain when it comes to intellect?
It's not hard to understand the simple concept of currency value. Print more money and the existing money becomes worth less. Print even more and it continues to drop. At some point it will become worthless. Read about Germany's Weimar government of the 1920s to get a glimpse of what it could be like here.
So when I hear professed intellectuals say that not taking $810 million in deflated dollars is insanity, I question their sanity. For every time you accept debt as a benefit, you widen the hole in the hull of the ship. That is true no matter what the new job scheme is. In the end it will still be debt, and people will be poorer than before or out of work because the stimulus jobs have run out.
We have joined the frogs in the pan, never realizing we are actually being boiled for dinner while thinking we are in our new swimming pool.
The $810 million referred to is stimulus money for high speed rail that our new -- and mostly brainless -- governor turned down. It may be the stupidest move a Wisconsin governor has ever made.
But my larger point is that the writer -- who I won't name here because I'm about to say unpleasant things about his intellect -- is factually wrong on just about every point. If you want an example of how badly our media is failing us, consider that someone can write something so ignorant without any fear of becoming the target of public ridicule.
For example, the government doesn't just print money. I've had to shoot this idea down more than once in conversation. And it's not just the right, I've had to address it in speaking to people about the Bush administration.
The government issues bonds. It's kind of like selling a loan. People buy those bonds and this covers the debt. In fact, most money is created by debt, since banks create money out of thin air when they give loans. No bank has cash reserves equal to the money it's loaned out. Money is created by debt and most of that money is speculative.
What the writer describes would result in a massive wave of inflation. In fact, he says, "Print more money and the existing money becomes worth less. Print even more and it continues to drop. At some point it will become worthless." And, even as he writes it, he fails to notice that it simply isn't happening. Currently, inflation is all but nonexistent, at an average of 1.64% last year. In 2009, when the stimulus was passed and the government was supposedly printing up all this worthless money and driving down the value of the dollar, inflation was actually a negative -- -0.34%. In other words, the value of a dollar went up.
Further, even if the government were simply printing money, how would that create debt? It'd be like cutting smaller pieces of pie; whether you slice it six ways or twelve, you don't wind up "owing" pie. It's impossible to cut it small enough that you wind up with a negative number of slices.
I guess what I'm getting at here is that, when it comes to economics, a lot of people are just dumb. It's only partially their fault -- we don't teach this stuff in school and we should. People are casting votes based on the economic mumbo-jumbo and that's an extremely serious problem. If we don't do something to raise the level of economic literacy in this country, we're heading for some terrible problems. Already, people who subscribe to this crap are being elected to office, where they're poised -- as Governor Walker is -- to wreak havoc on the economy, by virtue of their complete misunderstanding of the most very basic economic principles.
Until we make sure that our kids are learning how to be informed citizens by teaching civics and economics in high school, we're going to have to do this ourselves. If you hear someone making this argument -- and sooner or later, you will -- don't bite your tongue. Set them straight. Facts matter.
Because when people start making decisions based on this level of ignorance, we are really, really screwed.
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