Government employees are paid with tax money. When the economy is booming, so are tax revenues. What does government do with extra tax money? Return it to the people? Heavens no! They hire more government employees! When we’re in the middle of a financial bubble, we think we can afford all sorts of things we really can’t afford at all.
Bloomberg reported July 27th:
- U.S. local governments may cut almost 500,000 jobs through next year to cope with sliding property taxes, a decline in state and federal aid and added need for social services, according to a report released today.
- The report, a result of a survey by the National League of Cities, the U.S. Conference of Mayors and the National Association of Counties, showed local governments are moving to cut the equivalent of 8.6 percent of their workforces from 2009 to 2011.
Let’s be clear: I’m not gloating. It stinks when anyone loses their job and their ability to support their family. I didn’t blow the bubble; the Federal Reserve did. I didn’t make people believe the economy was better than it really was; the Federal Reserve did. I didn’t create an environment where governments and businesses made financial decisions based on a ridiculous and unsustainable easy-money bubble; the Federal Reserve did. Financial bubbles must pop. The geniuses at the Federal Reserve claim to not be able to see bubbles while they’re bubbling (but this is only so they can’t be held liable). In other words, the group who claims to be smart enough to manage the economy also claims, when it’s convenient for them, to not be able to manage the economy. Do their degrees qualify them to make economic decision for hundreds of millions of Americans, or just to stuff our tax money into the TBTFs?
We now present MZM: Money of Zero Maturity. Think of it as hot money, money looking for something to buy. Greenspan says the Federal Reserve can’t see or prevent financial bubbles. What the devil does this look like to you?
If you can see the Tech Bubble (1995-2000), and if you can see the housing bubble (2001-2007) then congratulations, you are smarter than the Federal Reserve. Go to your nearest Federal Reserve Bank (Right here in Richmond!), tell them they are too stupid to manage the economy, and they should please just go find real jobs making useful things.