"What makes a dollar worth more than two cents anyway?"
Well, Crap. There are a zillion and three things I want to blog about besides money, which I don't care too much about anyway. But it is important to our society, and to me personally whether I want to admit it or not. And there's so much bullshit going on as congress and President Obama try to come to grips with the debt issue. I feel like I need to add my 2 cents to the discussion even if nobody reads it. (At least I can say, "I told you so" later?)
The first problem is that nobody in Washington is really trying to fix anything. Everyone up there is just trying to position themselves for the 2012 Presidential and General elections. We have a potentially fatal problem with our government at present. The quality of government is unrelated to the process of government. Elections matter, not performance.
As a result, Truth has been replaced by Spin. Issues are secondary to sensationalism. Image over Substance is the nature of U.S. politics and government. For a while this was OK, even fun. But if we're not careful, the economy is going to prove to all of us that substance is more important than image, and truth overrides spin.
In addition, too many people believe too many fallacies about money. We need to think through these things better. And I can help, and intend to make some meager effort to do so over the next few days.
To set everyone at ease, I'm not doing the Chicken Little thing here. I don't think the sky is falling just yet. But I do think there are some fundamental things we need to understand better.
So here we go. The first one involves the intrinsic, actual value of a dollar.
We need to understand that our dollar based economy is totally based on faith. The dollar has no intrinsic value at all. The only value it carries is the credibility of the US Government. If we default on our loans, the credibility value of the dollar will be significantly eroded. I'm not using Obama's scare tactics. But I am saying that the US government and population cannot afford for our dollar to lose that global credibility. It's the only value the dollar has. Without it, dollars are worthless.
(I wonder if the faith-based nature of the dollar and consequently the entire US economy irritates atheists and other people who think living life by faith in something is ludicrous? Well, that's a different train.)
My point today is that all of the rhetoric about holding the debt ceiling in place and allowing the US to default on it's debt payments is bullshit. There is no way those guys can let that happen, and even if they don't know it, the real power people in Washington know it. There's nothing to worry about concerning the current talks going on. They'll raise the debt limit just in time to maintain the dollar's tenuous value.
But someday the issue really will be unavoidable. We have to balance the books either by spending less (like about half) or raise revenue (meaning taxes). We need to pay attention to how that is accomplished over the next few months and we need to correct some erroneous thinking about it.
I know it's not the most fun subject. But the economic climate is making it more important all the time. So, track with me and let's explore some of the fallacies and see if we can't separate the bull from the bullshit a little.