Why Economics Is Not Taught to Public School Children
- Strategeriest
- Jun 10, 2021
- 4 min read
Good Afternoon,
Do any readers know if it would be a violation of any law to require candidates for the House of Representatives/Senate to take a standardized Economics and International Affairs tests prior to each election?
After watching the ten-year yield decline today despite demand on our debt being met mostly by foreign central banks in the latest twenty year and ten year auctions, an accurate CPI print letting us know why our currency has been dropping in value compared to the rest of the world with proper budgets, and almost all asset classes continuing to froth in their bubbles, it was disheartening to watch a C-SPAN rerun of Representative Bill Foster. He infuriatingly displaying giddiness that he contributed to an INCREASED budget for the office of science by our Federal Government at mark 1:38:55 of the below video.
I understand displaying disdain for micro expressions, may seem uncouth, but considering Representative Foster’s potential financial stake in an XFL type NFL, I found his football analogy distasteful for multiple reasons.
The potential he has for Asymmetrical returns considering his “business” relations is alarming.
“Bill's business career began at age 19 when he and his younger brother co-founded Electronic Theatre Controls, Inc., a company that now manufactures over half of the theater lighting equipment in the United States.”
I am not saying this company is going to get a cut of the recent AMC donations, but if I were a salesman at that company, I would be calling on the NFL looking to “receive” revenue from their stadium offerings.
If this is true, hopefully at least some of the money the government is devaluing our cash savings with can go towards stopping the “CTE” epidemic inflicted upon NFL players. The sufferings of Junior Seau, Steve McNair, and many others was tragic and unacceptable. As Bill serves as the chairman of the Science Commitee's Investigations and Oversight Subcommittee, lets hope he is working to facilitate a solution to such problems with at least some of that money, not somehow funding them.
With the rest of their budget, it would probably best for him to ask it to be returned to the Treasury's General Account. I would like to remind Representative Foster that the Classical Growth economics model has held throughout modern history. This model has indicated several truths that he and his colleagues should take into consideration regarding his mentioned budget, and the United State's dwindling ability to cover it.
1. Growth in real GDP is typically temporary (especially when propped up by government spending), and it is also typically limited by a subsistence level.
2. New technologies typically result in larger, but not richer populations.
Both of these teachings from the Classical Growth model seem to be holding true in today's economy as the price of the raw materials we need to manufacture goods from abroad is stifling the industry in our country. This will make it increasingly harder to finance the government services the population has come to rely on, especially as the average citizen in the United States consumes more government spending than they contribute in taxes.
For those of you, like our elected representatives who seem not to be aware of how currencies are valued….
Currencies are valued based on interest rate differentials, and the confidence investors have that governments will be able to pay their bond holders back with a return that compensates them for the risk they are taking in lending them their capital. A simple way to think about them are as each unit being a mini bond or at least a resource of limited supply.
Basically, by most pure monetary models, an expansive monetary policy is going to drive prices up and the value of the currency down. This is happening in the US due to the planned COVID response. Unless the investments Representative Foster is planning on will result in labor productivity that causes an upward shift of the production function curve, now hardly seems the time to be making such an investment.
Government overspending is essentially putting us in cages. Recent indications suggest the economy is following the Dornbush Overshoot Model. Even still, we are experiencing significant CPI growth. As most prices are inflexible and don’t reflect changes in policy immediately, our elected representative’s and central bankers need to act now by cutting spending and raising interest rates.
Think of running the economy as oversteering a car on ice. Oversteering, and going too fast is bad. With expansionary monetary policy, prices will go up, real interest rates down. Efforts need to be taken to curb both effects, or there will be a depreciation of the domestic currency due to capital outflow. This will necessitate that the population will have to work harder and longer to maintain their standard of living.
Considering that most people I know would not like to live their lives slaving away, we should be pushing back against our elected officials enriching themselves at their constituents expense by voting responsibly in free and fair elections to ensure good people are elected into office.
Warmest Regards,
Comments