Category Archives: Economics

From Land of the Free to Home of the Slave

American Flag home of the slave to debt

The rich rule over the poor, and the borrower is slave to the lender.

—Proverbs 22:7

Most economists and investors believe our economy recovered from the Great Recession. They and the mainstream media say our economy is strong and that the Federal Reserve’s monetary policy worked. Conservatives seem convinced that Trump’s tax cuts signal the beginning of a new prosperity in America. Read more

Trump’s Tax Plan: America Gets a Lump of Coal in its Christmas Stocking

Christmas stocking hung fireplace

President Trump has referred to the tax relief plan he signed into law yesterday as “a giant Christmas present” for the American people. I’m convinced he really believes it is.

It certainly looks like one. I don’t know anyone who will refuse the hundreds or thousands of dollars this tax bill affords them. Yet we need to ask this question—who is this present really from? Read more

How Much Socialism Does It Take to Collapse An Economy? – Part 2

Empty shelves depicting economic collapse
The Road to Economic Ruin

In Part 1, I asked if the economic havoc wreaked by socialist dictators can be replicated in a capitalist democracy. I also stated that while Venezuela exports oil to fund their social programs, we, in part, export dollars to fund ours.

But what if the price of our main source for funding our social programs drops dramatically, will we experience the same problems as Venezuela did when the price of oil plummeted? Read more

How Much Socialism Does It Take to Collapse An Economy?

Empty shelves depicting economic collapse
How Much Socialism Does It Take to Collapse An Economy? Part 1

Economic and societal collapse in any nation is a tragedy. Inflation at 700% (expected to reach 2000% by 2018) devours the life savings of every Venezuelan. Food shortages along with high food prices caused the average poor Venezuelan to lose 19 pounds last year. Violent protests wrack Venezuela leaving some no choice but to flee their homes hoping to find a better life in a neighboring country. Others, with medical or engineering degrees in hand, have fled to Columbia but have found no work except as prostitutes. Economic sanctions squeeze Venezuela, restricting its ability to borrow money, though some nations, for political reasons, may lend at punitive rates. Meanwhile, President Maduro apparently has no intention of stepping down or declaring bankruptcy. Read more

America’s Level of Prosperity Is Not Sustainable

The proposition that the level of prosperity the U.S. enjoys is unsustainable will inevitably draw scorn from patriots and economists alike. Wealth creation, to many, has no fixed ceiling. Whether because of faith in the idea of American exceptionalism or in Yankee ingenuity or that America possesses an unsurpassed entrepreneurial spirit, or in our military might or that the good times will continue because we are the recipients of God’s favor, many cannot be convinced that our fortunes will decline significantly and for a considerable length of time. Read more

Negative Interest Rates – Ingenious, Absurd, or Diabolical?

downtown financial district

On January 29, 2016 the Bank of Japan announced it would join the European Central Bank (ECB) and three national banks in the negative interest club. Members in this exclusive club pay their own nation’s banks negative interest to keep excess reserves at the central bank in hopes that losing money will overcome the risk aversion banks have during uncertain economic times. Coercing the member banks to buy assets in this manner increases asset prices and decreases borrowing costs. By loosening credit the central banks believe they will spur economic growth and win the fight against their dreaded enemy – deflation.1 Read more