Is it Really that Surprising?

So, every morning at work, my coworker turns on some public radio station or another and listens to a program called "On Point." On this program, they discuss various things which don't really have any pattern at all. A couple days ago they spent an hour talking about bananas. Today, they spent some time talking about the recent investment in U.S. banks by foreign countries.

If you are equipped with two functional ears, you probably know that the U.S. is supposed to be headed for a recession caused by rampant loan defaults. Banks and financial institutions have been hit pretty hard, posting some pretty big losses in recent months. If you happen to pay any attention to financial news, you also know that some of these companies have received very large amounts of cash from places you might not have expected - the Middle East and (although I never saw this news story, they say it's true on public radio) China.

I just find it pretty funny that people are surprised by this. As far as I can see, this is an inevitable result of trends dating back to the end of the Great Depression. I'm no economist, to be sure, but this seems pretty obvious to me. Correct me if I'm wrong:

Since the Depression, the U.S. economy has been fueled by debt. Massive government spending was credited with getting us out of the Depression, both by war spending and (often pointless) civil infrastructure projects. This puts our government deeply in debt, debt from which we have not recovered from, and certainly don't seem close to recovering from. Government spending has continued and even accelerated, miring the government further and further in debt.

The economic theory that we currently use (at least as I was taught in high school - and I see no reason to doubt this as of now) is also based on debt. Low savings and high spending leads to higher GDP. Borrowing is one way of increasing spending; this is why when the Federal Reserve cuts interest rates, it's considered an economic stimulus - when rates are low, people borrow more money, and then they spend more money.

The average American also lives a life of debt. Home loans, credit cards, and student loans are something practically everyone in this country lives with. Our entire society is based upon this culture of debt.

Now I can't argue that this is all bad. Certainly it's done wonders for our economy - we're the largest economy in the world, yet we produce practically nothing. We do nothing for the world besides consume and invest. But all of this, our whole system, our whole way of life, is based on debt. There is nothing substantial to any of it. The fact of it is, if you owe more money than you have, you're essentially living a lie, spending what isn't yours. Most of us are like this: living on borrowed money, spending money we don't really have. Our entire system is based on nothing more substantial than a promise - a promise to pay money which, in all likelihood, doesn't exist, but is backed only by another promise, which is backed by another, and so on.

I admit that this is pretty awesome. We've basically built this whole system on nothing at all, and we're feeding all of our 300 million people by it. But it's pretty obvious that it's a house of cards. It may be the biggest and most powerful house of cards in the world, but it's still fragile.

Places like the Middle East and China, on the other hand, while they aren't as powerful as us, are built not on promises, but on real goods and real profits. Where we spend and consume, they save and produce. Saudi Arabia is rich off of exporting oil; China is rich off of exporting labor. They become wealthy by extracting real money from the fake systems of the U.S. It's genius in a whole other form, really. The ultimate result seems inevitable - eventually, the producers of the world will surpass the consumers. Then, when the consumers begin to falter, as is happening now in the US, the producers can infuse the consumers with a small amount of cash - a small amount which may keep the economy limping along for some time, all the while buying more from the producers, who continue to rake in massive profits. It's quite genius. With minimal investment they maintain a status quo which is making them very rich. Not being an economist, I can't say that this is what will actually happen...but I think it seems likely.

Even without formal economic training, however, I think I can tell that the culture of debt has a timer attached to it. It can't be possible to maintain an economy the size of ours purely on debt for too long. Now would be an appropriate time to champion drilling in ANWR, I think...



Oh, and what's really funny is that people are looking to the Fed to fix things by lowering interest rates. Because the best way to get out of a credit crisis is - you guessed it - borrow more money!

I could be a lot Angrier if I wasn't so Jealous.

It seems another comic lawsuit has been filed. A bunch of Texans have filed a lawsuit against Microsoft for not keeping their Xbox Live servers up during the holiday season. The plaintiffs claim that their "suffering" can only be repaid by a sum of $5 million.

I don't think I need to comment on the ridiculousness of the situation. If I so desired, the writer at Ctrl-Alt-Del pretty much said it exactly as I would. What I really need to say is, why didn't I think of this? I don't own an Xbox, so I couldn't very well sue Microsoft...but I've played MMOs. Servers have gone down while I was playing, and been down when I wanted to play. If someone had told me that this was an example of suffering and I deserved compensation in the millions of dollars, hell, I'd have filed this suit. A couple million for not playing video games for a few weeks sounds great to me. I wonder, maybe I can sue my parents for grounding me....

But we Sacrifice Like Lambs

Tax Reform

Everyone hates taxes. There is nothing about my financial situation that pisses me off quite as much as getting my paycheck and seeing exactly how much money the government has dug out of my pockets. Not only that, but in the US at least, taxes are a pretty complicated procedure. I have no clue how to do anything with taxes except pay them and seeth with impotent rage about it. So I'd be pretty open to the idea of tax reform.

Apparently, Mike Huckabee has a plan for this. He has embraced the idea of a national flat sales tax of 23%, instead of the current system. Now I don't know if 23% would be enough to support the monster that is the federal and state governments of this "free" country, but it occurs to me that the adoption of such a system would have one major bonus: the dissolution of the IRS and all related government organisations. There wouldn't really be any way to commit tax evasion; there's no income to lie about or tax returns to file. I'm not sure how much it costs to run the IRS, but I'd bet it's a hell of a lot of money. It would take a more informed man than me to figure out how much that would offset the much larger total budget, but in theory, it seems preferable.

Such a system would also remain progressive - people with higher incomes would still pay more taxes. Not because they have higher incomes, exactly, but because they would (theoretically) be spending more. The percent of thier income that is taxed might be less, but the absolute amount of the tax would be increased. This would mean that everyone would always retain the incentive to make more money; there would be nobody bent on making no more than $49,999 so that they stay out of the $50,000 tax bracket.

The article mentions that this system would be an incentive for people to save money, since it is a tax on spending and not on income. This makes sense to me, but I am under the impression that our economy improves by increasing spending, not reducing it. Rampant spending and lots of debt fuel the fires of the US economy - more spending means more income and more GDP. Not to say there's anything wrong with saving, exactly, but I wonder if excessive saving would save us from the credit failure we're supposed to be entering, only to plunge us into a completely different kind of recession, where people just don't spend enough money.

Seriously?

I just saw a very disturbing video on the Philosopher-King's sheeple-liberating friend's web page, although probably not disturbing in the way he intended most of those videos to be.

In this video, some psychologist guy designed a zombie-shooting game intended to put the player into a "catatonic trance." When they finally get someone to play the game and they pass out (still standing, by the way - a little suspicious), the psychologist comes out of hiding, puts the player onto one of those hospital beds, and wheels him over to a set designed to look exactly like the video game. They leave him (again standing up with a paintball gun in his hand - even more suspicious) and blow a horn to wake him up. After the subject runs around for a little bit trying to find his way out of this creepy place he's woken up in, doors around the room open, and people dressed as zombies come out, walking in the zombie fashion and groaning for brains. Shockingly enough, the dude freaks out and eventually starts shooting them with the paintball gun.

I'm not sure if this was supposed to be surprising or something, or if we're supposed to be shocked at how easily this guy started shooting at people, but come on... what would you do? If you woke up in a strange room surrounded by deformed people who looked like zombies and kept coming at you while groaning for brains, what would you do? Most people would be freaked out if a single hobo came up and tried to touch them. I don't think his reaction was surprising at all...

What was surprising was what happened afterwards. Eventually the psychologist dude came out and put the subject into a trance again (by putting his hand on the guy's face and saying something - also suspicious), wheeled him back to the video game machine, and woke him up again. The subject looked around at his friends and said "awesome game!"

His friends, by the way, didn't try to stop this at all, but actually helped the psychologist do all this crap. Which is also suspicious, because I'm pretty sure I wouldn't let some random dude do this to anyone I know...

So basically, I have two questions for everyone. First, isn't this illegal somehow? Second, what would you do if you woke up in a room surrounded by zombies?

Genius!

Facebook is a pretty popular network these days. Personally, I don't use it very often, but whenever I do log in, I usually have 10 or so invitations to various groups or events, most of which I ignore without reading. Sometimes, however, a group catches my eye as intriguing: 1,000,000 Strong for Colbert, for instance, or I bet I can Find a Million People who Dislike George Bush. I was reading through the discussion board of the latter group, chuckling to myself at all the comments, when I came across a link that I just could not pass up - a site called Kill Bush.

I imagine you can all figure out the agenda of this site without much help, but what I found really funny (besides the fact that sites like this exist) was a clever grammatical device they used in one of their stories. It's pretty apparent that whoever made the site is not exactly a grammarian, as the majority of the text is wrong in some way or another. However, a phrase that I noted immediately was the figure they cited as the number of people Bush has killed, or something like that: "tenths of millions."

This is pure genius.

I actually didn't even notice when I first read it what it actually said, until, a few sentences later, it occurred to me that the entire population of Iraq is something like 30 million. I admit I haven't been keeping up on the death tolls, but I think I would have heard about it if a third of the country had died. The author of this article has come up with a way to inflate figures without actually inflating them: use fractions that sound like big numbers. The next time I complain about my tuition bill, I'm going to say that I'm in debt by hundreths of millions of dollars. Maybe I can get a tax break that way.

Either that, or the author actually meant to say "tens of millions," and just sucks so bad at writing that he/she didn't notice that they used the wrong word. That's probably more likely.

"So what are your opinions on the assassination of Franz Ferdinand and the precipitation of World War I?"

I imagine if the Treaty of Berlin had remained inviolate ad infinitum, the entire issue might have been avoided. Alternatively, I suppose if the July Ultimatum was never sent, the fallout of the assassination, while still throwing Austria-Hungary into chaos, would have been significantly alleviated for the rest of the continent.

I never actually expected someone to respond to that question...

Well, I suppose in any case it's better than "would you believe me if I told you I was black from the waist down?"


Sometimes I wonder...what do normal people talk about?