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URL:  https://boards.fool.com/hi-capitan-the-comment-is-a-little-cryptic-but-24989374.aspx

Subject:  Re: Here's your chance: Balance the Fed budget Date:  1/2/2007  12:16 PM
Author:  Dwdonhoff Number:  200153 of 606097

Hi Capitan,

The comment is a little cryptic but very right. Every dollar the goverment spends ends up in a pocket.

That's silly, and only a half truth (or perhaps even only a quarter truth.)

In reality, every government managed dollar is TAKEN from a pocket (that generally manages it better than the government would,) and then a mere PORTION of it is spent to then be re-delivered to another pocket.

The slippage the government siphons in between adds zero value, but merely drains frm the economy.

Returning the management of the funds to the earners of the funds would have a NET POSITIVE effect on the economy, if nothing else than be the elimination of the "mordida" (slippage) that the government ineptitude siphons off at each touch.

The services the government buys are supplied by businesses that employ millions.

Unfortunately the government tends to do a massively pisspoor job of EFFECTIVELY determining WHICH services are most desired, in which proportions, and at what cost/quality levels... all at the common wage-earner's expense.

The transfer payments go to non-working citizens and are immediately exchanged for goods and services provided by yet more businesses.

"Transfer payments" are a code-word for welfare entitlements, I suppose. Let's call them what they are, and we'll circumvent the value determinations for now.

The interest payments float the financial industry, which pays the best salaries with it and accounts for about a quarter of the overall consumption.

The interest payments weren't a discretionary option on the worksheet... nor could they be, since they are contractual obligations for services ALREADY rendered and in place ongoingly (until retired.)

Any cut in spending will result in lost profits, either directly if you cut the pork, or indirectly if you cut the transfers. Businesses will cut back and there will be a recession.

This is half-blind thinking, and completely ignoring the realities. GOVERNMENT spending cuts do not result in aggregate lost profits AT ALL. They merely relinquish the dispersion and discretionary management of the spending to the common man, who then far more effectively spends his own money as he desires. If he spends less, he will increase the savings rate and decrease the need for wasteful welfare. If he spends the same, he will likely apply market pressures to get far more value than the government would or could have, and if he spends more he will do so in micro-targeted fashion achieving far better results than the government would or could have.

It's better not to be addicted to crack, but once you are, cold turkey may not be the smarter course of action. Unless the sight of long, long lines behind soup kitchens and national guardsmen fighting their way through barricaded cities is your idea of "a healthy government."

The "healthy governments" we've historically observed that created such results have virtually entirely smoked the crack of "government management" and "central planning."

Some learn from the past... others are doomed to re-live it. Clearly the current trend is smack-on-center toward larger "rely on us" government.

"Gird your loins."
Dave
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