Tuesday, June 07, 2005

There is no trust fund

Bush has declared of the trillions of dollars in Federal Bonds, which constitute the Social Security Trust Fund: "There is no trust fund – just IOUs." Those are our IOU’s – a debt to ourselves, to be paid out of money we entrusted to our leaders – and our dear president declared them “worthless.”

Federal Bonds are “just IOUs”? The currency in your wallet is an IOU. Your checking account, or your passbook account, can be seen as “just IOU’s.” The difference? Not really any at all – they all rely on the soundness of the American Government, or the willingness of foreign investors to grant us credit.

Well, at least Bush is consistent. He wants us to put a third of our retirement nest-egg into equities; but what does he do with his money? All the cash – nearly $5 million – is in those worthless IOU’s; and not one reported equity holding.

“Neither a borrower nor lender be,” for “the borrower is servant to the lender”(Pr 22:7). Debt, owed to yourself, held by the government, should make the government your servant. Had our leaders not engaged in deficit spending, all our debt would be to ourselves.

As is, we owe China, and Congress is facing a truth of hard reality – Chinese are intelligent, they pegged their yuan to the dollar and so made it immune to currency exchange fluctuations related to inflation. We can’t “inflate”, or “monetarize”, our way out of debt – when the creditor currency is pegged to ours, we can’t repay the loans with dollars of lessor purchasing value.

In the Federalist Papers No 79, Alexander Hamilton: "In the general course of human nature, a power over a man's subsistence amounts to a power over his will."

When we use debt it should be with a capacity to repay – thus avoiding servitude. The alternative is to accept servitude – entering a life as indentured slaves. The third possibility is that of borrowing with the intent to neither pay nor serve. The latter being the real theme in Shakespeare’s “Merchant of Venice” – racism toward the lender, and racist laws intended to restrict a group from earning their livelihood, is used for debit avoidance.

Conservative! We had best think about the meaning of that term and the effects of ignoring it. As we do so, let’s look closer to home – here in Maine, and more importantly, in Washington County.

Majority leaders Brennan and Cummings – both from Cumberland – want credit for transferring $2 million in school funding from Washington County to Penobscot County. As a result, our children are going to be deprived of educational resources and our property taxes will go up significantly.

In the news we see talk about tribal efforts to bring economic development. These are accompanied by racist arguments, on both sides, to justify non-development. Indians denounce it as “white man’s money” harming their way of life – which, in monetary terms, is abject poverty.

So we have a racist argument for a people keeping themselves impoverished. On the other side are non-tribal folk who oppose anything theat might help the county – if it will also benefit the tribes.

Racino verses LNG. Build a racetrack or a harbor. Who would be the client for each? The LNG brings money and is sold nationally, a racetrack serves locals and the occasional tourist – aside from the “triple crown”, few people travel to visit a racetrack, and fewer travel to play slots .

Who uses LNG and who slot machines? Which provides a benefit to the user? Which brings money into the county, and which removes money from the county? As Bangor will learn, slots are a losing proposition which remove money from a local economies.

LNG provides a commodity that is in demand – an export which brings in money. Both alter local landscapes – but only one establishes a facility which serves other commercial purposes – the deep water pier and moorings.

Wind power – winds Downeast are class 8; class 3 and higher is commercially profitable; it would take 20 generators to meet local needs plus a surplus. The choice is subservience or independence.

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