Tag: National Debt

Striking A Balance

Striking a balance is a key to life. One that seems to be sorely missing at this moment in time. In economics we call this balance an equilibrium. If you believe in the philosophy of Adam Smith you think a system which is out of whack will correct itself. Eventually. If you are a fan of John Maynard Keynes, your belief runs toward giving nature a helping hand through intervention. Usually government intervention.

To be honest, I tend to favor Smith over Keynes. (Although neither is my favorite.) The biggest problem with Smith is that nature can take a long while to correct itself. The biggest problem with Keynes is thinking man has the discipline, and the knowledge to strike and maintain a balance. Striking a balance is quite difficult. Maintaining one, perhaps impossible.

Debt

From time to time I link to the Debt Clock. I have already asked you to click here once this year but please do it again. The overall number is eye-popping. Over 25 trillion as I type this. But dig down deeper. Look at family savings, student and credit debt. Take a further look at household and national debt. Finally take a look at the M2 money creation.

The Federal Reserve is following a Keynesian path and pumping money into the monetary system. This chart from the St. Louis Federal Reserve office shows the steep increase in M2 since the start of the year. The Federal Reserve has deeply cut the interest rate on the funds loaned out. The rate currently stands at .25 down from 1.75 earlier this year.

From both the Debt Clock and the M2 chart one can discern the attempt at striking a balance the Federal Reserve is trying to make. It is not this action I disagree with. Instead I worry about the unwillingness for re-balance in good times. Why, were interest rates low to begin with when we were at all time market highs the first months of the year? Shouldn’t the rates have been at 3, 4, or even 5 %?

My fear is the inability of governmental entities in striking a balance. Keynes’ basic philosophy will work but only if humans can put aside for a rainy day. I have seen little of this in my lifetime.

Managing a Pandemic

Public service is difficult. I have had some personal experience on a local level and the job is tough. Making decisions for the public is not easy. A crisis makes it even harder. Dealing with Covid-19, while not unprecedented, is proving to be the greatest challenge many will ever face. This holds true on a personal as well as public level.

I think the problem will be most apparent in countries that have enjoyed more freedom for citizens. But I think people everywhere will struggle with striking a balance in fighting this pandemic. Individuals in countries that practice preparedness will do better than those who live in places where a just-in-time philosophy extends to households as well as production facilities.

There have been a multitude of agencies as well as people that have not responded as effectively as one would hope. Additionally, political leadership has not been on an even keel. But perhaps what disappoints me the most is the divisiveness of the human population. Although, I feel a little better about the split since reading Gina Kolata’s Flu. Apparently a similar split has happened in the past on the best way to deal with an epidemic.

Personal Responsibility in Striking a Balance

Nonetheless, I urge everyone out there to consider the needs of others. A person can look healthy and young on the outside, but suffer from lung conditions such as asthma or cystic fibrosis. Pacemakers are not just operating in the elderly. So for once I am asking you to “assume” something. Please assume anyone you meet, young or old, may have an underlying condition. Give people some space. Further, assume you could be asymptomatic, spreading disease unknowingly. And by all means, if you do have symptoms of Covid-19 take responsible actions.

Striking a balance between public health and public wealth is difficult. We all have a responsibility. As humans, we need to show respect for each other. At some point in the future we will reach an equilibrium. Let’s just hope we remember to repay the funding mechanisms. Otherwise, the difficulties of living through this pandemic will pale in comparison to a future of financial instability.

 

 

February 2018 Wrap Up

February 2018 was a short month! I am a few hours late posting this but that is what happens when you only have twenty-eight days. I really needed a leap year! In our part of the world we had a month with little moisture. Just a skiff of snow one morning which began dripping off the roof before mid-morning, I actually hooked up the hoses to water the trees. We had one day of high winds accompanied by fire warnings. This is quite a contrast to those of you who are water-logged.

My New Year’s resolutions are holding up. I added to my skills by learning to prune grapevines. I am a bit worried that I cut them back too far, but all the You Tube videos I watched warned I would feel this way. You Tube is a great tool for visual learners.

February 2018 Celebrations

February 2018 hosted many celebrations including a baby shower, a birthday and an anniversary. The baby shower marked the last time I indulged in any sweets. Ash Wednesday also occurred on Valentine’s Day and in observation of the Lenten season I am abstaining from sugar. This was prompted by my first book review of the month, The Case Against Sugar.

This time of year is usually so cold I limit myself to indoor activities. But February 2018 acted like a yo-yo. Our area bounced back and forth between days which remained below freezing and days that reached the seventy degree mark. As a result, some of my time was spent prepping the garden. Garlic and onions planted last fall are poking through along with the earliest of the spring bulbs. I may have erred on the early side, but rutabaga and potatoes were also planted. Some late snows would be welcome.

On the February 2018 days that were too cold to work outside, the indoor activities included starting a new acrylic painting. Unfortunately, my schedule keeps me from taking classes so I am taking the self-taught approach. In this case I am using a library book. This is my first attempt at painting a scene with water. So far, Creative Acrylic Painting Techniques published by North Light Books has been helpful. The photo below is after three days of painting.

Wild Markets

My reading this month included quite a few articles from the Wall Street Journal during the market sell-off. February 2018 marked the end of a very long run of gains. The volatility was not unlike that of the markets a decade ago. Although markets are unpredictable, I personally don’t feel the doom and gloom I experienced in late 2007 and all of 2008. However, I am keeping a close watch. Unlike the totally insane housing bubble, the markets rise over the past few years has a backbone. A correction is certainly due and perhaps even overdue. But unlike ten years ago, I see real cause for growth.

Technology is changing at a rapid pace and in more than one area. Computers and communications may be a driving force, but the health field is also undergoing great changes. Much of this growth stems from the unraveling of DNA. Much research is occurring. In some cases genetic diseases can be treated. However, the cost is tremendous as you can read here regarding gene therapy.

Even though I am optimistic about economic growth, there are some concerns. The greatest from an economic standpoint is the economic debt of nations. Two articles worth reading are from Statista and Global Finance. Countries with external debt carry a risk. In my opinion, some risk is acceptable. Most of the viable national economies operate with external debt. The concern is reaching the point where the debt is so great, the debt payments cannot be met. This tipping point is unknown. But, as in the case of Venezuela, which you can read about here, once a nation is insolvent things go downhill fast. For those residing in the United States, an up to the second accounting is given by the Debt Clock. The picture is not pretty.

Acrylic painting of water and grasses
Third Day of Progress

Quick Thanks

A quick thanks to Moe for sharing reading lists last month. It can be hard to comment first. I appreciate the involvement in the readership community. Please feel free to share what book you have on your bedside table.
Currently, I am reading New York Station so look for it in a review later this month. I also have a stack of gardening books. February 2018 was a short month so my reading fell behind. What else should I be reading?