Thursday, June 23, 2011

Time To Get This Vessel Ship Shape!

It's no secret we are having a financial meltdown, unless you've buried your head in the sand like an ostrich, your fully aware our country is spending more than it's taking in. Even the financial guru Ben Bernanke is finally admitting there is a problem, much to the chagrin of the Obama administration. While they sit in that big old White House on Pennsylvania Avenue and try to figure out how to spin that news into a campaign slogan, our financial ship is sinking. The economy isn't growing at an acceptable rate, and the leadership refuses to take ownership of the results of their "bailout" plan.

Here's the scoop, as a captain I have a little experience with sinking ships. In fact every ship you sail is sinking, the key is to control the rate the water comes in, that's why they make bilge pumps! If the flow of water in exceeds the flow of water out, your going down. So a wise sailor doesn't bail water, they control the flow. Same applies to your finances. If your "bailing out," the results are predictable.

The government needs to apply the law of consumption. Here's the reason, governments consume, they don't create. Governments collect money, they don't earn income. In order to earn income you have to produce goods or services someone finds of value. Not the job, nor the mission statement of government; so how does a government influence the economy? Well the only jobs they are able to create are government employment, which consumes not creates, so that's out. Let's take a page out of citizen's consumer handbook. To keep your budget afloat, you have to restrict spending to remain lower than your income. Another key to a consumer's financial success is to realize that any additional revenue your able to acquire isn't necessarily a omen to increase your spending output. Same rules apply to the government as it's just one giant consumer.

Consumers and governments don't spend money to invest, that's the definition of an investor. Investors risk large sums of money to create income, that's not the government's mission statement. The money the government holds belongs to the people, it's not theirs to risk. Consumers money is tied up in the purchase of goods and services necessary to survive, also not to be risked. You don't spend the rent money on the lottery.

We're often told the government is investing money on our infrastructure, that's absolute nonsense. Tax revenues were already collected to do maintenance and improvements, no additional funds are required to "invest." That's why we pay taxes on gasoline, diesel fuel, toll roads, airline tickets, etc. That money was budgeted and defined for use to upkeep and improve those facilities and roads. Because they diverted that income elsewhere, we are now misled to believe we have to "invest" in our infrastructure. This has to stop, or this ship is going down. The high water alarms are sounding, and we need to return to sound financial consumer based spending. That's all the economy needs to survive, a stable stewardship of our tax revenue, combined with simple, uncomplicated regulations businesses can foresee and rely on the stability of.

So in simple seaman's terms....Stop adding bilge pumps and fix the hole in the vessel!

God Bless!
Capt. Bill

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