Trailer Park Unschoolers

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Something to Think About: The Financial Crisis

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Okay, it seems Sundays have become political activism day, mostly with posts written in advance.  I don’t want to be writing on our family day, so I’m trying to be good about putting something together in advance.  I’ve been focusing on the events, movements, movies, etc. that have been inspiring me.  While I try to share these lessons with my kids, it’s not always easy.

This week I was scrolling through my options for documentaries.  There are a shocking number of documentaries on the food industry in America.  It’s surprising how many there are.  However, I was eating at the time and the last thing I want while noshing on all kinds of food that I probably shouldn’t be eating, but don’t have much choice because it’s affordable, is watch a documentary about all the bad foods I’m putting in my system.

Thankfully I found an older documentary I’ve been interested in seeing for years.  It’s called I.O.U.S.A.  It’s about the debt crisis in this country, where it originated, and how it came to be.  Strangely, it pointed out everything that I had been saying for years and I hadn’t even had half the facts this movie presented.

So, where does the problem with the economic recession come from in this country?  Well, it’s not completely the government’s fault.  I mean, sure, there is the problem with the governments debts and spending, but there’s also a problem with people spending fictional money, this credit, something that doesn’t exist.  It’s spending money on the promise of having money at some future time, with interest, of course, to pay for the advantage of borrowing.

I remember hearing about the government borrowing money from the American people in the past.  I think that’s what the whole thing about war bonds were about.  The government would borrow money from the population with the promise of paying it back at some future point.  It meant most of our federal debt was held by our own people.  In other words, we owed ourselves a good deal of money.  That’s kind of a good way to do it.  It’s like borrowing money from your savings account to pay your bills with the intentions of paying it back some time later.

Unfortunately, our country isn’t in a position to do that.  Why?  Most Americans are either too much in debt or simply have no savings to draw on.  Americans have gotten into the habit of paying for things they can’t afford.  Of course, this has caused hell on our own economy too.  When credit allowed consumers to start buying houses they couldn’t afford, the housing market went nuts.  Houses could be sold for outlandish rates because people could simply pay it off over the next 30 years.  There was nothing to put the cap on how much a house could cost but borrowing power.  With a huge demand and a pretty stable supply, we all know how that goes.  The demand greatly outweighed the supply so costs soared.  The same goes for everything else you can buy.  Why should cars be cheap when dealers can pretty much set their rates?  Why should entertainment be cheap?  All of this, in theory, is turned back into R&D to develop better things which will raise our standard of living and all that jazz.  Of course, the reality is we’ll eventually hit a wall where the population can no longer afford to pay the high costs of the things they want, so there’s a high demand in theory, but due to purchasing power the demand goes through the floor, yet all these companies have put so much money into their products and everything else that they can’t reasonably bring down their prices and keep providing superior products.  Advancement slows down and prices either drop or stagnate.

Well, we’ve hit that wall.  A lot of families I know are suffocated by debt.  The cost of living is out of control and it’s getting to the point where no one can afford to live to the standards they’ve become accustomed to.  This virtual money has eventually run out.

I guess the way to look at it is when you pump enough money into the system, money starts to lose it’s value.  I remember when a gallon of gas, the good stuff, cost less than a dollar, and I was old enough to have friends buying gas, so maybe fifteen years ago?  I remember being able to go to the store and buy a gallon of milk for a dollar with my mom on Sundays after church.  We’d come home with a gallon of milk and a dozen donuts.  It cost us about, I don’t know, $5, I think.  We used to go down to the corner store and get penny candy that actually cost a penny per piece.  We’d pick up a pack of baseball cards to see if we could find any for my dad’s collection and they cost less than a dollar per pack, and came with a piece of bubble gum, which was always my favorite part.  Yet in my lifetime everything has skyrocket.

Now people look at pennies and simply throw them away.  A lot of people don’t value pennies because, while yes, each penny saved will eventually add up, it takes far too many of them to make an impact.  When I was a kid my parents would put all their spare change into a long-necked wine bottle.  When it was full, about once a year, they would dump it out, roll all the coins, and take it to the bank.  I always loved that time of year.  It was so much fun to count all the change up and roll it all.  I think in pennies we only ever had about ten dollars.  Right now that wouldn’t make much of a difference for my family.  Ten dollars in pennies per year wouldn’t even make a dent on one of our household expenses.  I know more than a few people who don’t bother hanging on to change unless it’s a quarter.  That should say something about the value of a dollar.  The economy has been flooded with so much spending power that good, legitimate money is simply passed up because it requires collecting too much of it to make a difference.

With the whole 99% or 98% thing, a movement that can’t seem to get it’s act together to make a decision on what percentage it actually is, they’re demanding that the Federal Reserve release more money to the population, since that will solve the problem.  Unfortunately, what they don’t seem to understand is the more money we flood our economy with, the less value it will have.  The rate of inflation will rise as a necessity.  The problem won’t be solved.  It will only be worsened over time.  The value of the U.S. dollar will further decline.  Interest rates will rise.  The lesson that really needs to be learned, for people to only spend what they have and stop relying on virtual money, won’t be learned.  Why?  Because the Federal Reserve can always bail us out, right?  The 99%ers won’t like the suggestion that’s helped in the past.  Decreasing the amount of money in circulation actually raises the value of the dollar, and while that means there’s less money to go around, the increased value will eventually balance things out, but no one wants to hear that as a solution.  They’d rather just throw money at the problem, isn’t that always the way?

Beyond the Federal Reserve, we’ve got to look at who’s holding our debt.  I’ve heard a lot of people complaining that we’re sending all of our good jobs to China and the whole situation with China has a lot of people really heated in this current campaign.  I wasn’t aware of this before the movie, but there’s this whole “financial war” going on.  Technically we started it when France and England were considering war on Egypt.  I wish I’d taken notes because I don’t remember the year, but I think it was back in the 70s or 80s.  We threatened to use our buying power to prevent England from declaring war on Egypt, just so we could keep the peace.  That set an example for other countries to follow, such as…oh…say…China?  Who holds a large portion of our financial debt right now?  Who do we owe large amounts of money to since we can’t owe it to our own American citizens?  Yeah, that’s right, China.  So, most of our foreign debt is held with China, so that gives them a lot of power over us.  If we don’t play nice with them, they’ll demand we return their ball so they can go home, which kind of puts a damper on the whole ball game.  Cutting the metaphors, if we don’t respect their country’s wishes, they’ll decide it’s time to reclaim the money we owe them.  This would bring complete ruin to the U.S. economy.  This leaves us with two option, play along, or find a way to reconcile that debt.

Then again, in order to manage our debt and get back on track, we’ve got to look at another issue.  Our country is importing a lot more than we’re exporting.  I already knew that, but I hadn’t linked it to this fancy term “trade deficit”.  Our trade deficit is massive.  Other countries, such as China, are really in the positive when it comes to trade.  They’re making a lot of money on exports, but not paying out a lot for imports.  Our country is totally backwards in this regard.  A lot of this has to do with outsourcing jobs to other countries like India and China, but when you consider how much money we owe to other countries, we kind of have no choice to outsource there if they demand that we do it.  Remember, they’ll take their ball and go home.  It’s not about cheap labor.  It’s about keeping their governments happy because we can’t afford for them to demand their money back at this time.

But this also ties into the last topic I talked about.  As I’ve been taught to believe (which, if someone knows different, please let me know) a good portion of our exports lie in the food industry.  We produce far more than we eat and have always been able to send our foods to places that can’t produce as much for a profit.  Only there’s a problem with that now.  Other countries don’t want our produce.  They don’t want our meat.  Pretty much, if we produce it, they don’t want it.  Why?  Because of the GMOs.  Because of the growth hormones.  Because of all the junk we put into our food during the growing process that is proven to be unhealthy.  As a result we’re unable to offload this food onto other countries for a profit.

It also doesn’t help that we waste so much money in this country.  Look at all the trash the average household produces.  Look at all the food waste that ends up in landfills.  Look at all the senseless, unneeded items that are bought in this country.  There are homes filled with electronic gadgets and fast food kids’ meal toys, all manufactured in some country other than our own, that never get used or touched.  Eventually they end up broken and tossed or given away.  Kids seem to be the biggest sink-hole in this regard.  I can’t count the number of houses I’ve seen with so many kids’ toys that they can’t possibly play with them all.  Even my house was that bad at one point, but mostly with things that other people have bought for my kids or gave away to us.  In the years I’ve been in Texas I’ve gotten rid of over 20 trash bags full of toys and another nearly 15 full of clothes at least.  I used to have a running tally but somewhere I lost it.  I could have easily given away over 40 bags of clothing and toys we no longer used.  That’s not counting the bags of fabric, yarn, boxes of books, and everything else I’ve given away.  Then there’s everything that’s gone out in the trash as a result of being broken, torn, or otherwise unusable.  We still have more to give away too.  What’s sad is my family hasn’t given away as much as other families I’ve known.  Maybe if we started buying only the things we needed and were more conscious about where our products were made we might reduce our shocking consumption of imported products.  We would also learn to live within our means and not on this fictional money that we promise to pay back at some later time.

In short, this financial crisis has been a long time in coming, and the solution isn’t going to be easy.  It’s not as simple as “cut federal spending” or “raise taxes”.  It’s not as simple as no longer supporting industries giving business to China.  We don’t want to push them past their tipping point to the end of having them demand a return on their money and making our whole government bankrupt.  It’s a process that’s going to be a long time in coming and it’s going to require a lot of time and patience.

Here’s my suggested list of solutions, for what they’re worth coming from an “uneducated” American.  Yes, I say “uneducated” for a reason.  According to the government I can’t be too bright.  Not only do I not have a college degree, but a real shocker for most people, I never graduated high school and don’t have my GED.

First, we all need to start taking responsibility for our own finances.  Getting ourselves out of a debt-based economy would be a huge start.  That means making sacrifices.  That means living within our means, not above them.  I know I’m probably preaching to the converted if you’re reading this (since most of the people who read my blog seem to be financially responsible people on their own), but it’s worth being said.  Say no to credit whenever possible and when it’s not possible, like buying a house, pay it off as quickly as possible.  This will free us up to start saving money.

Second, stop the trend of over-buying.  This leads us to become a society that has less waste, which is a good thing.  This also cuts our reliance on importing goods from other countries.  Sure, many goods will still be manufactured in other countries, but buying less of them will mean less money goes into importing goods.  Of course, with all the money saved on buying excess it will be much easier to turn that money around and spend it on more expensive American-made goods, which will further reduce our reliance on importing goods into the country.  That will do a lot for our trade deficit.

Once the country is living in a cash-based economy again instead of a debt based economy and has freed up a lot of the money tied into buying in excess and buying foreign goods we can look into instituting a “war bond” kind of thing.  The American citizens can spend their free money to invest in our own country.  The benefit?  That money can be spent to reconcile our foreign debt.  We can pay back the countries we owe money to, like China, so we’ll no longer be over a barrel when it comes to foreign relations with them.

Okay, so getting our country’s financial independence back is a huge start, but that’s not going to fix everything.  We’ll still have problems like our government’s over-spending problem to deal with.  Foreign wars are definitely a part of that, so resolving the conflict in Afghanistan and Iraq would go a huge way to doing that.  We need to disentangle ourselves from those causes because they’re costing more money than we realistically have to spend.  We can’t fix the world’s problems until we fix our own problems.  We can take up those causes again, if need be, once we are in a position to afford a foreign war.

What about that whole Federal Reserve situation?  Well, from the way the movie explained it, it looks like we need to get more money out of circulation to raise the value of the dollar.  This would also decrease inflation.  From the way it was explained in the movie (and I’d have to do more research into the reality of it to say with more confidence), that would help us get out of debt because the value of our dollar would be worth more.  Having more purchasing power means that the federal government can get more bang for it’s buck too, which means they can work on finding more balance in their own system.

Another huge change we could make?  Stop producing GMOs.  Other countries don’t want to buy them.  We don’t want to buy them.  They make people sick.  Once we kick our GMO experiment we’ll be better able to export our excess food to other countries, which will mean our exports will rise.  Pair that with a falling need to import goods and we’ll be headed in the right direction.  Pair all of that with a country that no longer feels the need to eat in excess and we’ll be on the fast track to balancing out our economy.  We’ll have that much extra food available for export.  If it’s done right, all of this will cause food prices to fall and for the purchasing power of the dollar to go up, which will mean food will be more available to everyone, even the poor people who have to live on food stamps to survive.  Then again, if we get our economy straightened out, food stamps could end up being a thing of the past, something people only rely on in dire straights, not something they need for their very survival.

I remember in A Connecticut Yankee in King Arthur’s Court the main character was talking about how stupid the people of the time were because they didn’t understand the value of money.  They didn’t get the equation of what money really meant.  Your money is only as good as your purchasing power with that money.  For example, a minimum wage job about 15 years ago was about $5 per hour in the state I lived in.  For that money you could buy about five gallons of milk.  A couple years back minimum wage in that state was about $8 per hour.  For that money you could buy two gallons of milk.  So, in fifteen years you’d make $3 more per hour, which sounds pretty good, until you see that your purchasing power is only 40% of what it used to be.  If I’m doing my math right (which I may not be because I haven’t done this kind of math since high school), that’s a 60% raise, but you also lose 60% of your purchasing power.  That’s not an improvement.  At first glance it looks like a good deal, extra money, but in the long run you’re actually a lot worse off than you would have been.

So what am I saying?  I’m saying that we’re only as good as our purchasing power, which is exactly what’s causing us to get into the rut we’re in.  Our government’s purchasing power is a joke.  Our personal purchasing power is going down the tubes.  We’ve got to do something to improve the state of our own economy, and it starts at home.  We need to get our debt out of other people’s hands.  We need to balance out our imports and our exports.  Most of all, we need to make sure we’re able to live within our means.  Otherwise, sure, wages may keep going up, but our purchasing power will go down the tubes.  Our country will end in ruin.

This movie really did open my eyes up to the state of our government’s financial problem, but it also gave me some good ideas on how to fix it.  Now if only I had the format where I could reach the people who needed to hear this message, not just the people who are doing their best to be a part of a positive change in the world.

Our children will some day inherit the Earth.  Let’s make sure they’re not also inheriting our debt and the messes we’re making of the world around us.  This goes so much more than green living and the sustainability of the planet.  What use is having a good planet to live on if they can’t even afford to live?

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Author: Fox

With four kids in the house, who has time for much? Well, we're trying to make it work, trying to get as close to our unschooling roots as we can while state restrictions and family pressures try to stand in our way. Every day is a new adventure.

One thought on “Something to Think About: The Financial Crisis

  1. I really hope this falls upon the ears of the deaf and dumb that really need to read it. And heck yes……stop the GMO!!!!!!!!

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