Radio Ga Ga

You know, I really have to change my clock radio to a music station - it's pretty depressing to wake up to the news. Kind of ruins your day.

No, it wasn't the news of the guy killing a bunch of people at a university that sunk me - unfortunately that kind of news is all too common. Perhaps some day I'll talk about why I think this young generation cannot deal with reality and choose to slaughter a bunch of innocent people instead on their way out - and it's not because of guns!

It was the news about the Fed Chairman saying they may lower the Fed interest rate again! Would you please stop tinkering with things and just let the recession happen!!! You're only going to make things worse when the correction occurs!

My time in New Zealand was very instructive on the relationship between the government treasury interest rate and the value of the currency. When interest rates go down, investors are less likely to buy the currency, so the value of the currency drops. When interest rates go up, investors are more likely to buy the currency, so the value of the currency increases. We were always watching the value of the US dollar versus the NZ dollar to try to get the best deal when we transferred money back home.

The value of the US dollar has been on a downslide for some time now. That's why we have inflation, and why a dollar "back in the day" got you a lot more than it gets you today. The Fed just lowered interest rates a couple weeks ago 1.25% (I believe) - a huge adjustment and almost unheard of - to try to help stave off the approaching recession. Now that the market still is going down (which it always does - the market will bounce back a little on news of an interest rate drop, but reality always comes back into play), the Fed is saying another rate cut is coming. What this does is increase speculative investing - because money is so cheap - artificially pumping up stock prices and the economy. Eventually, we're going to have to face reality, and the correction will be even more painful. I say lets just take it now - staving it off just involves more and more people in the pain - those who screwed up should have to feel the pain, not the rest of us.

First it was the "dot-com" bubble burst. To not make things too painful in the aftermath, the government artificially propped up the housing market with low mortgage rates (based on low Fed rates). As housing costs artificially skyrocketed, people used the phantom equity to buy all kinds of toys, artificially propping up the economy. Well, now the housing bubble has burst, and people's houses are worth less than what they owe the bank, and the government is busily trying to stop the correction again! Let it correct! If you want to do something, cut back on taxes and spending - we just set a record for the largest budget in history - $3.1 trillion dollars!

So the government is giving money to people as "tax rebates" and telling them to spend it to help prop up the falling economy - giving these rebates to the 50% of people who don't pay taxes, mind you - when the average credit card debt in this country is $5000 or something like that (don't quote me, but it's in the thousands). We need to save! We need to stop spending like drunken idiots and start being responsible! This whole economy is smoke and mirrors, and has been running on debt for too long! Let those who are irresponsible take the hit, instead of bringing everyone else down with them (kind of sounds like the guy shooting up the school before killing himself, doesn't it?)!

But no, we can't have any pain or any lessons learned in this country. The idiots who bought a house that was too expensive for them are now being bailed out - the banks forced by the government to extend the sub-prime and prime interests rates for these morons - who do you think pays for it? We do! The responsible people out there who save and spend wisely, because if the banks cannot collect the interest they are owed, we do not get a decent interest rate on our money. And all the artificial propping up of the economy with free money and lower interest rates causes the value of the dollar to fall, so the dollar you diligently saved today is worth less tomorrow! Interest rates are lower than inflation!

Who else should feel the pain? How about the greedy, speculative bastards out there who were riding the gravy train of increasing house prices, buying homes and "flipping" them (you've seen the shows on television) - and now their investment is worth less than they bought it for. Or how about the real estate funds on the stock market? Oh boo-hoo! I lost a bunch of money on a stock when I was going to college, and did I whine to the government to give me my money back - no! I took the hit and learned from the mistake.

I should make something very clear, so there are no misunderstandings: I am not rich. Not in the slightest. I have a very modest home that I am fixing up myself, and two older-model toyotas. My wife and I live a pretty simple life - DVDs are our only vice. I buy cheap beer.

But mark my words: we are in for some real problems, and they are coming soon. Thanks to our government-run public education system, we have an entire generation of people out there who believe they deserve and are entitled to success and happiness. No, you have the right to "pursue happiness" and nothing more - but they wouldn't know that because US history isn't taught anymore. These people want what you have spent years, or maybe a lifetime saving for, and they want it now. I call it the "self-esteem generation," and they cannot deal with reality. Life is hard. Life sucks. Your feelings don't matter. These are foreign concepts to these people. And when the harsh realities of life come home, these people get really pissed off. They cannot deal with failure. If they don't have money because they haven't saved or made wise choices, they will elect people to steal it from you and me, who have saved. Why not? You read my last post - might as well, everyone else does in this country!

Or, in rare instances they walk into a classroom at a university and start shooting, taking everyone else down with them. Same motivation. Same outcome.