Wednesday, December 3, 2008

Liberty Bonds

This picture was taken in 1918, and it shows a car selling Liberty Bonds. It is amazing to me that in these days gone by, the government actually had to have some level of popular support to deficit spend. The gentleman above appears to support the war effort, and is purchasing a bond. Now it seems like every time I turn on the TV I am hearing about another 100 Billion bailout of a failed institution, while maintaining the same failed management team, same big bonuses, and same unwanted and outdated products. I really wonder where all this deficit spending will end.

7 comments:

  1. The fellow on the left side bares a resemblance to Harry Truman. Unfortunately, the govt. is the only institution that can print the money that it spends and so the deficit balloons. Our greatest tragedy is that we have outsourced our mfg. industries. If an event such as WWII were to occur again, I doubt that we would have the ability to assemble our forces. It's a double edged sword of course; Americans want to pay less and American made products cost more. But as far as quality is concerned, you cannot do better than American made. I have a Notre Dame T-shirt that is over 15 years old and it still looks good as new (it was made in the U.S.A.). Other shirts of mine not mfgd. here last about two or three years before fraying. The question is: can we get back and if so how do we get back to becoming self sufficient. I do not profess to be an intellectual, but it is my considered opinion the NAFTA was the beginning of this entire mess. Ross Perot was right when he talked of the "big sucking sound of American jobs leaving to go overseas". I apologize for the rant. God Bless all in the blogosphere.

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  2. I don't think it was NAFTA but that was a contributor. American jobs started going overseas long before that though. Nike shoes made in Indonesia, clothing made in Nicaragua (by children no less), etc. Remember the Kathy Lee Gifford scandal with her clothes being made by children? Anyway, the way to make America self sufficient again is to reduce the cost of living (somehow, I'm no economist) and make it affordable to live here AND buy our own products. All this demand for consumer goods is partly driven by outside forces. Media tells us we should have bigger houses, monster cars, fancy TVs, etc., so like lemmings we go buy these things. Were media to tell the masses that we need to save money, be satisfied with what we have and not what we don't, and live within our means, well that trend might catch on too. I am just ever grateful that I have no credit card debt like so many in America!

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  3. You have wondered what happened to the people in the photos you post. I saw one of your pictures featured in a story on CNN.com that asnwers the question about a picture you posted on Sept 16, 2008. I thought I would share. http://www.cnn.com/2008/LIVING/12/02/dustbowl.photo/index.html

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  4. We won't see any Liberty Bonds being issued by our government to assist in all its re$cue mi$$ion$.

    Hopefully we will allow the Big-3 auto makers to reorganize under Chapter 11, and any rescue monies should be contingent on providing vehicles that can deliver 50 mpg on regular gasoline. Of course, other demands should attend our offer.

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  5. Government can't print the money it spends, otherwise we would have a hyperinflation like Germany in 1919-1923, with prices doubling before you could carry your 500 billion to the bakery to buy a loaf of bread. If government wants to spend more than it easrns in form of taxes, it must borrow from individual's savings, with the promise to pay back with interest (war bonds, liberty bonds; the Germans did the same in World War I, that's why the German government was not unhappy with the inflation it brought about, as that meant they could pay back in money that was worth almost nothing), or it must borrow from banks. In the latter case, that means that deficit spending increases the total amount of money (any bank credit creates a deposit; banks lend newly created money, money they are allowed to create on the basis of existing accounts). This new money is needed to ensure the level of economic ativity; inflation only occurs when there is more money than goods to buy. In fact, if government could bay back all of its bank debt, the amount of money in the economy would drop dramatically (every return of a loan destroys the newly created doposit; the total amount of money only groes when there are more new credits than old ones are being paid back). No deficit spending would be a good thing for the taxpayers and future generations of them, but without deficit spending, we would have to think of another source of new money to ensure the level of economic ativity that is necessary to keep jobs and incomes. It would be fairly easy just to have the Fed determine how much growth of the money base is needed, and to create it and distribute it to all families and individuals below a certain income level: those are the ones most likely to actually spend the money.

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  6. Yes the government prints the money, but then they GIVE it to the Federal Reserve System of private banks, and BORROW it back. That borrowed money must be repaid with interest so the government (we) will always be in debt.

    Look up fiat money system for a jolt stronger than your morning coffee. ;o)

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  7. Bruce, not quite. The Treadsury (more precise: the Bureau of Engraving and Printing) prints the Federal Reserve Notes, but the Fed gets them only in exchange for worn banknotes or Federal Securities. But don't forget that's just banknotes you have in mind: most of the money in our economy is just bank deposits. Private banks are the main origin of the money supply. http://en.wikipedia.org/wiki/Bank_deposit

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