Friday, September 25, 2009

Economics and what I see

I don't know much at all about Economics. I took one very basic class about it in high school. What I see in the real world economy and the state of it over the years is has follows.

I was born in 1980 so I grew up during the Reagan years and forward.

When Reagan enforced his tax policy and his belief that the government "helping" us was the root of the problem inflation was down, employment was up (mostly), and the government was not controlling how we could live our lives as much.

Over the course of time (eight years) his economic plan showed that it worked. Yes the national debt became huge. However, that has to do with the majority of the governing body not wanting to stop spending.

Just like I was taught in school, at home, and by personal experience. When you spend more than you make you end up in debt and if you continue doing it then you will never get out of debt. That is why most of us are taught in school and by our parents how to create and keep to a budget. Your average pay check is x amount of dollars. Your bills are y amount. So you take x-y and you have the set budget for your household. Anything left over can be put away for later which is the smart thing or spent on that shiny new toy you wanted.

It is plainly obvious to me that the people in our government and most of the public think that the government money comes from thin air or grows on trees.

The reason I say this is because  of the bail outs, welfare, budget gaps, etc. If  you tax the rich enough they stop investing and creating jobs. They start "hording" the money so that they can live in the way that they have gotten used to. The truly rich have means to cut their taxes in half or more with legal tax shelters and charitable donations.

Underneath them you have the upper middle class which gets killed by taxes and that goes down the line into the poverty class.

Since the rich are not investing or creating new jobs the unemployment goes up and people of all "classes" stop spending money on luxury items which makes the whole economy plunge into "recession".

To sum up; think about the economy has a circle of life type thing. The highest thing on the cycle needs the lowest on it to survive. You take even one thing out or make it less available then the whole life cycle dies off or becomes extremely unhealthy.

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