Archive for category finances

The *Need* to Redefine Poverty in the United States

Poverty in the United States: Air Conditioning, Cable TV and an Xbox | The Heritage Foundation.

 

The article linked above highlights the need in the United States for a redefining of poverty as deemed by the Federal Government. When an “impoverished” American owns a refrigerator, has cable TV, and a cell phone; something is wrong with the definition.

Poverty is a worldwide concern, but in the United States, the government’s use of the term is only designed to manipulate. Just yesterday, Treasury Secretary Timothy Geithner noted some interesting facts:

“…remember this country, this great nation with our great resources today, one in eight Americans are eligible for food stamps today. Forty percent of Americans born today are born to families eligible for Medicaid.”

When 40 percent of Americans, which is equal to around 120 million people are eligible for Medicaid; it may be time to redefine the eligibility. If 30 million Americans are in “poverty” and 54.5 percent, which is equal to around 16 million, own a cell phone; and there are 90 million more who are eligible for Medicaid, there’s a problem with the proof of eligibility.

Shouldn’t the number of Americans who are eligible for Medicaid come closer to the number eligible for food stamps–about 40 million, as opposed to 120 million?

I understand there should be some give in that number, but when the “poor” in this country have adequate housing–enough to be able to keep a refrigerator running–then as troubling as poverty is, the definition in terms used by the U.S. government is equally disturbing.

Bottom line: if you can afford to have a cell phone ($40 per month) and cable TV ($50 per month), then you’re really close to being able to afford cursory health insurance. In America, as illustrated by these figures, poverty isn’t so much an issue of can’t as it is won’t.

Let’s help the poor, but let’s be wise about the government’s use of the word “poverty”.

–the civil commentator

 

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Why Not Run $1 Trillion+ Deficits?

This is why: Analysis: High-yield and U.S. debt at risk if Japan repatriates.

The United States now stands at the brink of a debt crisis. The Obama Administration has embraced the Keynesian model of recession intervention: stimulus. This embrace has not been merely a handshake, but rather a full-on bear-hug.

The recent tragic and devastating dual natural disasters in Japan, resulting in a frightening dual environmental and public health nightmare highlights just one of the many reasons to keep public debt under control.

The article linked above may be a bit confusing if it is the first of its kind that you have read, but permit me to summarize it.

Japan owns a great deal of public debt from sovereign nations around the world. It has invested heavily not only in quickly developing nations such as Brazil, but also in the United States. As the article states, Japan holds nearly $7,000 billion ($7 trillion) in external assets; $890 billion of which are debt obligations of the United States.

With the need for Japan to recover from a $180+ billion disaster, it is quite likely that Japan will be pulling funds back into the country out of investments that it has from around the world. Even if Japan doesn’t proceed with this course of action, it’s almost a certainty that it will be a minor or non-existent partner in funding our debt for the near future until its rebuilding is complete.

All of that to say this: there is one less major investor for the United States to count on in the near future.

Who will be taking up the slack in United States debt purchasing during Japan’s recovery phase? Right now it’s anybody’s guess.

Should national tragedies affect other key investors in U.S. debt–China–it could lead to large scale issues here in the States. The loss of consistent debt purchasing by Japan will not be an easy pill to swallow, which makes it all the more necessary for the United States to get its financial house in order.

One issue President Obama hasn’t yet had to deal with so far during his Presidency is a lack of financial backers around the world. The United States has always been an excellent investment for countries around the world; a huge economy with huge resources. The U.S. cannot run huge budget deficits without someway to pay for them. Sure the United States could just print all of the dollars that it needs to pay its financial obligations, but at some point inflation takes hold and the printing press must stop. The only other way to meet it financial obligations is to borrow money from other countries.

Adding $1,000+ billion deficits every year for the foreseeable future has always been scary, but what happens when one (or more) of your best ‘customers’ doesn’t shop at your ‘store’ anymore? Not good.

–the civil commentator

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Theft By Inflation

allfreelogo.com

Inflation Always Steals the Benefits of Devaluation.

This is a very interesting article that I hope you will take the time to read. It will detail for you why our currently weak dollar will work against us as Americans and why a strong dollar will enable us to come out of the doldrums we are currently experiencing.

That being said, the process to strengthen the dollar is not an easy or pleasant one. It will involve pain and though the American people can deal with pain, they rarely let politicians keep their jobs when they experience it. Therein lies the dilemma.

The availability of cheap money, like the ridiculously cheap money that Americans have access to now and have become accustomed to, is a result of extremely low interest rates. Cheap money doesn’t just mean low interest rates, it also means low value. There are a number of methods to raise the value of the dollar, but the primary method available for use by the Federal Reserve is raising interest rates.

Raising the interest rates in a slow or stagnant economy can have deleterious effects on both the economy itself, and on the mood of investors in the stock market. Raising interest rates tends to slow economic growth because companies and individuals aren’t able to borrow money to make their money stretch. Companies and individuals can’t borrow money to make capital investments or buy gadgets without having to give up making more capital investments or gadget buying in the future.

This is why the economy and the stock markets don’t like to see the Federal Reserve raise interest rates. They fear that it will exacerbate an already delicate recovery, and that’s why money was made ‘cheap’ beginning as early as 2001 and remains ‘cheap’ to this day.

Money was made cheap during the recession of 2001 and the subsequent distress on markets after the attacks of September 11th. We as a country never grew up and weaned ourselves from this cheap money; and as such we have come to rely on its utility in our economy.

Until such time as we are willing as a country to accept some economic pain or until such time as the Fed is forced to raise interest rates or risk economic collapse; dollar weakness and its harmful effects will have reign on our economy.

–the civil commentator

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Lose the Cable TV, Gain Your Life?

this is a post from the financial blog Frugal Dad.

not that I’m giving up my cable/satellite TV because of it, but it definitely puts life and the “need” for cable TV into perspective.

i hope you enjoy it:

Lose the Cable TV, Gain Your Life?.

 

–the civil commentator

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