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State of the (Monetary) Union 2013

Dan McReavy - 26/01/2013 14:57 CST

Minneapolis, Minnesota, United States

I've recently noticed many grown-adults almost giggly about life.  Maybe it’s the stock market, maybe it’s a low-interest mortgage refinance or maybe it’s their horse winning the election race. The atmosphere is disconcerting to me.


There are big problems below the surface and a self-imposed debt-ceiling is not "it."


I'm not going to drag the tired debt-ceiling media hook of "we need to spend less" out because no one truly WANTS to do that.  Forget about the elected politicians, YOU don't want to spend less!  And, if you don't want to spend less, what less can you expect from your vote?


When you're obese, moving from a fructose-high Coca-Cola diet to a NutraSweet-high Diet Coke isn't going to make you look any better in a bathing suit.


You have to diet and exercise for that bathing suit body!


Since fiscal year 2009, the US government has been consuming over a trillion dollars more than it earns each year.


Why?


Because you want the government to.


If the US government wasn't consuming an extra trillion dollars worth of living each year, life, as the world has come to know it, would end.  That is, the world of perceived infinite growth and infinite opportunity.


If the US government wasn't consuming, you probably wouldn't have a job today.  Who is your customer that supports your consumption?  Who does your customer earn an income from?  What about your customer's customer?


It's one big daisy chain of consumption and companies are only as strong as the customer and people are only as strong as their employer.  In our current economy, the government is the primary consumer upon which all other consumption is built.


Everyone seems to be a financial genius these days, so let's take a top-level look at the three intellectual “states” of the people in the US.


Tea Party Republicans - (No Spend/No Borrow) 10% of the population (estimate)


The Tea Partier profile is someone that wants a small government and a balanced budget.  A classical conservative is another suitable description, if you prefer.  Tea partiers like to talk about gold and silver, guns and how a gold standard would be honest this time...if only we gave it another chance!  They’re also frequently described as the good-ole white boys party.


In simplified terms, no government spending beyond the basics and no borrowing money.


Democrats and Republicans - (Yes Spend/Yes Borrow) 89% of the population (estimate)


Yes, today, these parties are the same.  Bipartisan is a code-word for “the kids are playing nice together.”


I call these people DeRps.  Ignore what they say, watch what they do!


Your common DeRp wants government spending and lots of it.  DeRps don't care if they have to borrow it's only important that all of their choice interest groups (hobbies) are fed at the end of the day.  The only difference between the DNC and the GOP is what the spending goes toward.  They're consumers just like generation x women and no one takes their men seriously.  The generation x women wear the pants in the DeRp household and they represent the marginal power of the DeRp vote.


If you're into programmed reality TV shows, the DeRps offer a lot of sibling rivalry intrigue for your interactive enjoyment.


Modern Monetary Theorists - (Yes Spend/Yes Mint/No Borrow) <1% of the population (estimate)


These guys are the neo-monetary academics. The MMTers deconstructed our digital financial system and decided they like government spending and hate government borrowing.  The only reason you might have heard of them is because of the sensational trillion dollar platinum coin idea they floated in December.  The MMTer looks at life like Neo in the movie The Matrix and "the spoon doesn't exist."


The Matrix party believes the US government doesn't need to borrow money, shouldn't borrow money and should INTENTIONALLY run a deficit.


"Heresy," you scream!


Or is it?


What is money?


Where does money come from?


Why do some people have so much money (savings and spending power) and many others so little?


Whether you are a Tea Partier, DeRp or living in the monetary matrix, money is what drives your vote and you need to be able to answer those questions.  The world has an economic problem that is financially rooted in the US.  The US is consuming (spending) an increasingly larger percentage of the gross domestic product and THAT is the unsustainable trend.


It's time that ordinary people get a proper education on modern money and the political system that forms on top of it.  Start asking questions!