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Counterfeiting And Cash For Clunkers

August 15, 2009

Everyone seems to be head over heels for this “cash for clunkers” program.  Obama is printing up a lot of money, and spending huge deficits of borrowed money, and throughout the torrent of spending he’s managed to breathe some life back into the auto industry.  But like a lot of Americans, I’m against most of what the government has been up to these days.  But before we talk about “Cash For Clunkers”, I thought I’d share something I found online. Source:  (http://www.whitehouse.gov/blog/Facts-Are-Stubborn-Things/)

“There is a lot of disinformation about health insurance reform out there, spanning from control of personal finances to end of life care. These rumors often travel just below the surface via chain emails or through casual conversation. Since we can’t keep track of all of them here at the White House, we’re asking for your help. If you get an email or see something on the web about health insurance reform that seems fishy, send it to flag@whitehouse.gov.”

(Emphasis my own)

Am I the only one who thinks this has a terrible stench to it? Report dissenters to the government?  And what exactly does the government plan to do with those dissenters?  Free speech prohibits the government from intervening in our blogs, our emails, and the conversations we have in our homes.  “… or through casual conversation.”  What does that even mean?  So if my parents seem to be worried about healthcare reform, and in conversation repeat some misleading facts they heard from Fox News, I’m supposed to report them to you, Obama?   You’re going too far with that one.  Way too far.

If you’re out there “reporting” people from exercising free speech, shame on you.  It’s one thing to hold a news agency accountable to facts and quality, like when Lou Dobbs was igniting the birther movement, or when Glenn Beck spouts out literal nonsense in his Doomsday scenarios.  I’m against fearmongering, hate, and misinformation.  Sometimes I wish big corporations were fined everytime they lied on the television, so they were forced to tell the truth.  Unfortunately, who is going to be the infallible source for what’s “true”?

The other day, I thought about this issue, and I thought about someone setting up a website, kind of like YouTube.  LieTube or something like that.  People upload news clips, and then people view the clips, and also view other people, uploading their videos, telling why it’s wrong, and false.  After evaluating each video, similar to its own case, like a court of law, the public votes on it.  If a huge number of people vote on a video, and an overwhelming majority vote that it’s an outright lie, fearmongering, racism, or something else like that, then whoever is “responsible” for spreading the idea, whether it be an individual, or a news network, a big website, or whatever, they will face a nasty fine.

It’s just an idea, but there’d be a lot of details that’d need flushed out.  What I like about the idea is that these commentators, who have such a large influence on society, will not be able to hide under the “free speech” crap, when they’re out there spreading nonsense.  I’ve watched Glenn Beck with my mother, and half of what he says is true, and half isn’t.  He’s quick to throw out these facts which are deceiving.  Someone needs to hold them accountable to facts, where they’re scared to just throw crap out there.  They need held accountable, and not just a slap on the wrist.  You need to attack their pocketbook, which will shut them up real quick.

The problem is that this system could be dangerous as well.  I think, to protect the little people who don’t have as much resources, you can only be fined under this system if your outreach reaches a certain sized audience.  But a lot about such a system scares me as well.  We, as a society, would have to really think this one over.   The one thing I DO know is that having the GOVERNMENT say whose facts are distorted, or not, is DEFINITELY the wrong way to go.

So I don’t like seeing the Whitehouse building lists of dissenters.  But if some of you out there want to write me in, here’s a templated letter to send:

Jason is a pacifist, and believes your administration’s wars are evil.  He believes your economic stimulus policies have robbed the people of over 20 trillion dollars, and he’s guessing you won’t reform the financial markets to end this from happening again, though he really hopes you will.  He also believes you’re a direct threat to our civil liberties, and finds your renewal of the Patriot Act appalling.  He also doesn’t like your views on “Indefinite Detentions”, and hopes you change your policies on that matter as soon as possible.  He supports your efforts to minimize carbon emissions, and is worried about global warming.  He understands it’s a delicate issue, and hopes your programs for solar, geothermal, wind, and other energy sources pan out.  But, he doesn’t think you’re doing enough.  He thinks carbon emissions need to be cut even more than they already are.  He thinks Cash For Clunkers is only artificially propping up the auto industry, which should have went under.  He also believes the only reason the auto industry went under to begin with is due to the the Federal Reserve’s loose credit policies.  Auto companies, like many other American corporations, became dependent on this influx of credit, but once the credit valves were shut off, the entire economy began to constrict.  He believes this problem was created by the bankers, and you’re doing nothing about it.  In fact, he believes you’re rewarding them.  He’s skeptical about your health-care reform.  He had a lot of hope in you, but now thinks you’re like most politicians and are nothing but another liar.  Even so, he still has a small twinge of hope in you, though it’s not much.  He hopes you implement a government health insurance program, to compete with the private insurers to break up their monopolies, and create true free competition again.  He also hopes you end the monopolies the pharmaceutical companies have on the healthcare system by allowing Medicare to negotiate for lower drug prices.  But he doubts you’ll reform the drug industry as the news is reporting  that you recently met with Big Pharma, and struck a private deal with them, making sure those negotiations never happen.”

But this isn’t about Healthcare reform.  I want to talk about “Cash For Clunkers”.  Is it a success as most are proclaiming?  Not at all.  It’s just another government program which is eroding away the middle class, and it’s being sold to the public through propaganda.  Let me explain.

Obama definitely gave  life to  the dying auto industry.  I’ll give him that.  He bailed them out, just like he’s bailing everyone else out.  Unfortunately, like the law of conservation of energy in physics, economic life can’t be created out of thin air.  Printing money cannot create economic success or truly stimulate an economy.

The principles behind the success of “cash for clunkers” is the exact same principles behind the “success” of counterfeiting money.

Say I wanted to stimulate the local economy here in my hometown.  If I had a printing press in my basement, and I printed up say, $100,000,000 and then spent it here in the local businesses, we’d all be doing very well.

I could buy myself several brand new homes, which would breathe life into the real estate firms.  I could buy a bunch of new cars, breathing life into all the auto dealers.  I could buy all new furniture for all the homes, breathing life into the furniture stores.  And so on.  All the businesses here in my town would be booming.  They’d all report huge profits, and even if they were on the verge of death before, just about to let go of all their workers and close shop, they’d all be alive once more.

Sounds like a successful policy, doesn’t it?  Maybe we’d see Jon Stewart on Comedy Central making comedy bits praising the printing press in my basement, calling my policies a great success.  He’d make some clever joke about it, make me look cool, and everyone would love me.  CNN could report, “Central Missouri’s economic woes are over.  Businesses report huge profits, and jobs are secure.”  Then all who oppose the policies, we’ll make sure to label them uneducated rednecks, too stupid to understand the breadth and depth of this system.  Or maybe we’ll play the race card.  Since I received direct authorization to do this from the president himself, all who oppose it must be racist.

But if counterfeiting money brought about such a resounding success, then why is it illegal?  After all, we see just how easily printed money can bring about economic prosperity to an area, right?  Or are we missing something?

Yes, we’re definitely missing something.  There was no real prosperity created here.  Only theft.  All those in central Missouri, and myself (the original counterfeiter), all got a HUGE benefit.  But take someone far away, say in Southern Florida.  They get no benefit out of this whatsoever.

In fact, those in Florida get screwed completely in this deal.  They see none of the economic benefits in their area, and also, their prices are going to all go up as this new printed money circulates throughout the economy.  Really, all they are going to experience is increased costs through inflation, and reap no benefit.  The purchasing power of their wages is going to go down as costs rise faster than wages.

In other words, while all of us in central Missouri rake it in, and live it up, the rest of the nation has to foot the bill.

Whenever money is printed up, the farther you are away from the “epicenter” of the newly injected money, the less benefit you will receive.  The guy who counterfeits the money receives the most benefit.  That newly created currency then purchases things in the local community around the counterfeiter, thus bringing prosperity to all of them.  Then those businesses purchase supplies for themselves, and spend money, passing new money, and new benefit to them.  But as this money trickles its way down through the economy, whoever gets it later down the line gets less and less benefit.  Why?  Because prices in the products begin to reflect the new influx of currency, and those who get very little of the new money, or possibly none at all, end up with nothing but higher costs.

So back to the “cash for clunkers” program.  It’s not surprising to find “success” in an industry after giving them a ton of free money.  Print up a bunch of money, and hand it to the auto industry and say, “Gee, isn’t this amazing?  The auto industry is doing great now!  We saved all the jobs!”   And if they’re not printing money to fund the program, they’re having to tax one group and give it to the auto industry.   That that particular industry will start to do well, after being artificially propped up, is no wonder at all.

The ones truly footing the bill here is the middle class.  There is no such thing as a free lunch.  The rich, and the financial oligarchs have already received so much money in TARP and other stimulus bail-outs, that whatever minor offset they have to endure due to a little more printed up money, or some taxation, will be completely negligible compared to what they’ve already received.   According to Bloomberg, they have received, or are in line to receive some 20+ TRILLION dollars.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aY0tX8UysIaM

We, the everyday people, get a few billion to help us buy a new, grossly overpriced vehicle, and we’re crawling to Obama on hands and knees, saying, “Thank you Obama!  Thank you!  I’m so glad you’re helping the little people.”  We’re being satisfied with the crumbs falling from the master’s table.

Even Nobel laureate economist Paul Krugman has been telling us over and over in the New York Times, that Obama has not yet reformed the financial industry.  I doubt he ever will.  The financial oligarchs are right back to their schemes, as we speak, and little to nothing has changed.  And to put icing on the cake, they’re STILL paying themselves the huge bonuses, at the taxpayers expense.  Wonderful.  Just wonderful.

Krugman tells us all about it:
http://www.nytimes.com/2009/08/03/opinion/03krugman.html?_r=2

And did you all hear about this one?  Bank Of America collects $38 billion in overdraft fees.  Bail-out saves the bankers, then they’re making huge profits charging overdraft fees, because people are so broke they can’t pay their bills anymore.

http://www.huffingtonpost.com/2009/08/09/banks-make-38-billion-fro_n_255135.html

It’s unreal.  There was all this news about Gov. Arnold Schwarzenegger, and how he couldn’t close the $26 billion dollar California deficit.  So he starts cutting welfare, and domestic violence shelters, dental plans for orphans, and shutting down national parks.  “We don’t have the money…”  And Bank of America gets $36 billion from overdraft fees alone?  What?  And the only reason they’re still in existence is because we bailed them out?  WHAT?

I’m really looking forward to Michael Moore’s new film.  He’s making one about the these bail-outs, and all the corruption.  It’s called “Capitalism: A Love Story”.  Hopefully it wakes a lot of people up.  His film “Sicko” is probably one of the biggest driving forces behind healthcare reform.  That was a great film.  I really hope it can get people to demand financial regulation, and change in banking.  Maybe enough people will stand behind Ron Paul’s effort to audit the Federal Reserve, the banking cartel’s central establishment.

The reason why it’s getting harder and harder for people to live is due to this financial corruption within the banking system. People’s retirements are being obliterated.  Savings accounts stolen to rampant inflation.  Stock markets are manipulated.  It’s beyond ugly.

But let’s finish discussing Cash For Clunkers.  The used car market is being destroyed, because these “clunkers” are being dismantled.  The poor, particularly those who make less than $20k per year, are going to have a harder time buying pre-owned vehicles.

If these sorts of policies of destroying pre-owned vehicles is continued, used cars are going to be a thing of the past.  And if you want to drive a vehicle, no matter how little you drive it, you’re going to be forced to buy yourself a brand new, outrageously overpriced vehicle.   My car is used, because I barely ever drive at all.  I drive maybe once every two months?  I walk all the rest of the time, ride my motorcycle, or ride a bicycle.  I suppose when my car finally quits running I have to buy myself  a $20,000 car, which will then lose 20% of its value the second I drive it off the lot, and continue to depreciate day after day.  Then 5 years later it will be worthless.  And if I don’t have cash to buy it outright (and if inflation keeps up, nobody will be able to save up money to buy a brand new car, not even highly paid people), I’ll have to finance it, and pay all that interest as well.

Let’s see what it’d cost me to buy the cheapest new car, even with all these “clunker” incentives.  I wonder how much money I would have to spend in interest.  Here we go.  In my area, my interest rate (for those with good credit anyways) is 4.27%.  That’s for 36 months.  Make minimum payments on (16,000 – 4500 = $11,500).  Let’s see.   That’ll cost me $340.91 a month.  For a 3 year loan, I’ll end up paying around $771 extra in interest.  Total I’ll pay out $12,271.

I feel sorry for those with low paying jobs.  Those making $12 an hour, or even less.  They may have $1200 a month, TOTAL, after taxes.  If this car payment was their only bill, then it’d be alright.  But considering groceries, rent, healthcare, car insurance, gasoline, and more, that’s just making things rough.  I don’t think they can afford a third of their entire paycheck each month to make the minimum payments on a vehicle.  They’d be better off with a used car, which they acquired for $5000 or possibly less, which still runs good.  Might be a little older model, but it’s reliable, and gets them to and from work.  If these policies continue, I imagine people in this income bracket will start to bum rides off one another, carpooling to and from work.

This, I guess, might be a good thing considering global warming, and carbon emissions.  Riding together to work, instead of all driving our own car, would definitely be helpful.  Still.  I think this entire program has a sleazy element to it.   The main point is it impoverishes the country.  It doesn’t enrich it.

I’ve heard some argue against the idea that this program is  helpful to the environment.   They say we’re not being told about the factory emissions while producing all these new vehicles.  If these new vehicles emit less pollution, those savings are sure to be offset by production the unnecessary demand new vehicles, instead of fully utilizing vehicles we’ve already produced.  So as for environmental savings, they say it won’t be much.  I honestly don’t know how much carbon emissions are given off by an automotive planet during vehicle production.

I think the auto industry is becoming too dependent on the federal government to operate.  What happens when the $4500 clunker programs stop?  They’ll sell some cars, but then what?  Once the price goes back up, will people be able to afford them?  Are they going to have to continue intervention, year after year?  If it can’t stand on its own two feet, let it fall.  They need to go under.  We can’t prop it up forever.  If it can’t stand, there’s obviously something wrong with GM, and they’re not doing things right.

And I also take the side of most republicans on the issue of the government running things well.  FedEx and UPS deliver better service than the U.S. Post Office.  AmTrak, even with a government established monopoly, still isn’t profitable, and needs government money to continue operation.  Medicare is going bankrupt.  There is some validity to the fact that the government has a tendency to screw things up.    Take a look at Wikipedia’s entry on AmTrak, under “Public Funding”:

“Amtrak commenced operations in 1971 with $40 million in direct Federal aid, $100 million in Federally insured loans, and a somewhat larger private contribution.[52] Officials expected that Amtrak would break even by 1974, but those expectations proved unrealistic and annual direct Federal aid reached a 17-year high in 1981 of $1.25 billion.[53] During the Reagan administration, appropriations were halved. By 1986, Federal support fell to a decade low of $601 million, almost none of which were capital appropriations.[54] In the late 1980s and early 1990s, Congress continued the reductionist trend even while Amtrak expenses held steady or rose. Amtrak was forced to borrow to meet short-term operating needs, and by 1995 Amtrak was on the brink of a cash crisis and was unable to continue to service its debts.[55] In response, in 1997 Congress authorized $5.2 billion for Amtrak over the next five years—largely to complete the Acela capital project—on the condition that Amtrak submit to the ultimatum of self-sufficiency by 2003 or liquidation.[56] Amtrak made financial improvements during the period, but ultimately did not achieve self-sufficiency.

In 2004, a stalemate in Federal support of Amtrak forced cutbacks in services and routes as well as resumption of deferred maintenance. In fiscal 2004 and 2005, Congress appropriated about $1.2 billion for Amtrak, $300 million more than President George W. Bush had requested. However, the company’s board requested $1.8 billion through fiscal 2006, the majority of which (about $1.3 billion) would be used to bring infrastructure, rolling stock, and motive power back to a state of good repair. In Congressional testimony, the Department of Transportation’s inspector-general confirmed that Amtrak would need at least $1.4 billion to $1.5 billion in fiscal 2006 and $2 billion in fiscal 2007 just to maintain the status quo. In 2006, Amtrak received just under $1.4 billion, with the condition that Amtrak would reduce (but not eliminate) food and sleeper service losses. Thus, dining service were simplified and now require two fewer on-board service workers. Only Auto Train and Empire Builder services continue regular made on-board meal service.”

I honestly believe GM is heading the same direction.  It’s going to be run poorly, and probably require subsidies to continue operation.  I feel the worries the government will screw up healthcare are well founded, regardless of what the media says.  Our healthcare system is currently so bad, we need the government to step in and provide an option, to break up the monopolies. But I doubt the government option is going to be great, but it will at least force reform onto the private insurance companies.  ANYTHING beats the quality they’re currently providing.

I hear the “left” so often claim that since the government runs a good healthcare system for the troops, it could also do so for the people.  In theory, this argument sounds plausible, but I don’t think it works that way.  You see, the big oil companies and corporations, which practically run our government, need the troops.  They support the troops, because our government is currently using them to steal oil from the middle east, and the military is one of the main instruments to their power structure.  Taking care of the troops is just one of the costs of making sure they can keep their hands on the big oil profits.  Without the troops, those profits aren’t possible.  So, sure, they’ll take care of THEM.  Us?  I wouldn’t bet on it.  We’ll have to fight for healthcare.

Maybe that makes me a “conspiracist”, because I think our government is evil.  Whatever.  When I look at the facts, it’s simply what I see.  Just remember one thing about our government.  We all saw how quickly they rushed us into Iraq, even when we had no real evidence to be there.  And even when the evidence has been proven bogus, we’re STILL over there.  They always find money for tanks, fighter jets, and weapons.  But when the people ask for even basic healthcare, the politicians cringe, and debate it so long it never happens.  When the bankers needed bailed out, the government passed legislation with record speed.  But who got cut when finances got tight?  The orphans and their dental plans.  Think it over.

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