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Economic Awareness : Inthon

As the fundamentals of our economy remain unchanged and the inevitable economic difficulties increase, individuals will gradually raise their level of consciousness about our economy from apathy to anger.

Fundamentals that remain unchanged:

1. Ridiculous levels of government credit card deficit spending. (Borrowing $ from China & Japan to fight two wars, pork stimulus, bailouts, etc.)

2. Outrageous pension benefits for state/local employees (no widespread calls by politicians to renegotiate pensions despite a 30% market plunge)

3. Unsustainable entitlements (Social Security, Medicare)

4. Plunging tax revenues as more businesses close

While there are others, those are the first issues that come to mind.

When my family and I discussed the auto bailout a few months ago and whether or not it was a good idea; emotions ran high. My parents, fans of the auto bailout, were upset that politicians like Richard Shelby were dumping on the Big Three.

They probed for reasons to support their claim that the auto bailout was justified while the bank bailout was not. In the attempt to pin the blame on Washington, they did get some truths correct:

1. They realized Washington had no clue how to manage interest rates.

2. They also realized banks had far too much influence and power in DC.

3. They lay the blame on Wall Street for taking on too much risk.

In my opinion, people across the US are now finally trying to realize who is at fault and how did those at fault allow this to happen. As people become more conscious of this fact, they will hopefully begin questioning things that seemed sacrosanct in the past. Things like:

* Government controls interest rates and jawbones to manipulate the market.

* Banks are allowed to use a Discount Window to borrow even when overleveraged.

* Both Democrats and Republicans went along with Alan Greenspan, could it be that this isn’t a Democrat/Republican issue?

I close with a quote from a friend who said:

“I can understand that there are a lot of people in really bad shape right now and a lot of them have worked hard and have nothing to show for it…

They aren’t gonna blame themselves because they know that the government is to blame but they don’t know how or why they are just angry and can’t/won’t control it.”

I sum this up as follows: Lack of understanding + Apathy (can you blame them?, economics is confusing…) = Anger

As this crisis continues to unfold, it is imperative that those of in the “separation of money/economy and state” crowd do our very best to educate, enlighten, and draw attention to the truths that both our currency and economy cannot be micromanaged by government, but rather, they can only add value to our lives when combined with the competitive forces of a free market.

Thanks for reading.

To read more about our economic future, read here.

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