When it comes to the economy, it’s a good bet that you know more than you think you do.
Many Americans are puzzled when they hear of the proposals put forth by big-government politicians and sympathetic economists. Most of these ideas run completely contrary to common sense, yet they are couched in deceptive jargon (“quantitative easing,” anyone?) and delivered in solemn tones by people who “matter.” It’s hard to blame the average person for simply assuming their own ignorance and putting their faith in the powers that be.
Those who do this are not giving themselves nearly enough credit.
Policies such as creating money out of thin air and attempting to spend our way out of debt are just as harebrained and irrational as they appear at first glance. If you can’t see how printing numerous pieces of paper stamped with “Federal Reserve Note” will increase our productive capacity or augment our physical resources, you are not being naïve — you are absolutely correct.
No amount of spin and fancy terminology can ever replace key economic truths, such as that wealth cannot be willed into existence by a bureaucrat with a printing press (or these days, a computer). Of course, that doesn’t stop anyone from trying to convince us otherwise:
This video – a tribute to Ben Bernanke, TIME’s 2009 Person of the Year – does a grave disservice to the intelligence of the American people. While it is purportedly meant to provide an accessible snapshot of the Fed, it actually sends the opposite message: that our central bank really is a “mystical” institution with a “bag of tricks” that are way over the heads of the common people.
But consider some of the statements here:
For example, the claim that the Fed’s number one goal is “preserving the value of the dollar.” Sounds impressive, until you realize that the value of the dollar has dropped by over 90 percent since the Fed’s creation. That means that what you could buy with a dollar in 1913 would take about twenty bucks to purchase now.
Another line: “Money out of thin air? Sounds like magic to me!” It sure is, in the sense that every magic trick has a catch. While the hosts would have us believe the Fed’s “magic checkbook” is nothing to worry about, anyone who has watched the cost of living steadily rise over the years should have a few doubts. Every time this supposedly simple process takes place, the value of your money is decreased. Some magic trick.
“Don’t try this at home,” the narrator flippantly advises us at one point. That’s a red flag, too. The national economy is obviously more complex than a typical household’s finances, but when you or I make a purchase, we need to actually have the funds to pay for it. How can it be that the government can just make the money appear every time it wants some, and this is supposed to be a good thing? Short answer: it isn’t.
Just when a few questions might be starting to form in your mind, though, we suddenly switch to a portrayal of Ben Bernanke as Gandalf, the powerful wizard from Tolkien’s Lord of the Rings. And who are we to doubt the wisdom of the man pulling the “levers on the economy,” as interest rates are described. The message is clear: pay no attention to the man behind the curtain.
The moral of the story? Don’t presume you can’t understand the economy just because you can’t understand the techno-babble you hear from the authorities on TV. Trust your judgment and your real-world experiences. Do your research, but if it confirms your gut feeling, don’t just assume it’s you that’s the problem. You know more than you think you do.Published in