doom letter #14

Since September of last year I have spent a lot of time (like many others who had not previously) reading and learning about finance and the economy. I am not sure if I am any smarter for it all, I am perhaps a little dumber than I was when I started it all off.

One thing I have noticed, to get to a point, is that there is a lot of energy expended in the media on hyping the amount of money the government is spending on the effort to restore the status quo. You can get all sorts of figures that vary between $1.5 and $12 trillion that has been pumped into the economy by the federal government and the federal reserve. I am using the word pumped in this case instead of spent because I do believe that there is a difference. I am also using it because we don’t really know where a lot of that “money” has gone or if it has even moved – the federal reserve is not well known for sharing information about their activity and they are the source of a big chunk of that money.

You can pick any number in the range or make up your own if you want. The problem that I have, and that I can’t seem to get past, is that I do not understand the difference between propping up the economy with borrowed money from the government and borrowed money from citizens. There are plenty of people that span the political spectrum that are outraged about the amount of money the government has spent. The left is upset that so much of the money has been directed to Wall St. The right is equally annoyed that the government is “interfering” in the private sector. Regular old mother fuckers get a tidbit of information from the news and distort it to pick on whichever group they don’t like. I don’t know where I fall but I am confused about why we are supposed to give a shit about how money is spent just because it is coming from the government now.

Before all of the bailouts, business functioned largely on consumer spending funded with credit. A lot of that has dried up and the government has stepped in to attempt to fill the void. Lets pretend for a moment that no bail out ever took place and rich people were just playing their old game of taking advantage of working people directly through turning a profit on their consumption. Would you be outraged that some bank on Wall St. was making billions of dollars in a quarter? Would that information receive much attention in the mainstream media? Would you even find out? My guess is that most of you would answer no to all three questions. Sure some on the left have always been upset about how much some rich people make, but why do they give a shit? Why do their profits and compensation matter more now that the government is pumping them full of borrowed money? All that the government is doing is taking the place of the consumer in propping up the American dream. The burden will still be on the people of the US at some undetermined point in the future.

I say if you didn’t care that employees of Goldman Sachs were making huge sums of money before September of last year, then you need to sit down and shut up now. Most of America paid no attention as Wall Street robbed us blind for years directly, but now that the government is involved and instead of regular dollars, tax dollars are included we all get bent out of shape by the fat cats. The economy is all a figment of our imagination anyway.

I do not expect greedy people to stop making money just because the majority of America in unison woke up and realized that they were actually poor and in debt this whole time. It is what greedy people do, particularly when they are good at it and very well connected. They don’t see most of what regular people see in their day to day lives, so I doubt they will think twice about receiving another fat check courtesy of America’s errant votes in the past. I was listening to Democracy Now’s podcast from 7/16 and Amy interviewed Wendell Potter (no relation to the wizard) who was a PR guy for an insurance company that suddenly grew a conscience. The thing that struck me about the interview is that like most other corporate types, he did not see anything wrong with what he was doing. Until he woke up and realized that his jet setting lifestyle was funded on the backs of people that his employer was trying to fuck out of as much money as they possibly could while supposedly providing them with the service of health insurance. This didn’t sit well with him so he resigned and became the left’s new wet dream, apparently. I bring up Mr. Potter because I think that before his conscience came into play he was the typical corporate dick that had a mortgage and all the other obligations that go along with the American Dream. Since he resigned I guess he deserves some credit but I think it is crazy that you can live long enough to work your way up to being spokesman for a major corporation and not realize what your employer has to do to pay your paycheck – or realize why they needed a PR department in the first place. Old Wendell is just another cog in the machinery.

My contention is that there is no difference between tax dollars and profits. It is all money that is being taken away from you, against your will, and redirected as the thieves that stole it from you see fit. A government tax is not more or less noble than a corporate profit. It is simply another means to extract the profit of productivity from one group of people to another. If you don’t understand that after reading this post, then you are worse off than I am.

taxed and profited on,

mike