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Thursday, April 15, 2021
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Bob Bell: Welcome to the land of free money

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By BOB BELL

Let’s take a look at this “free” money from the stimulus plan. The $1.9 Trillion American Rescue Plan is touted as what the American people want by both Democrats and Republicans. because the government is handing out “free” cash. 

You have to ask: “How free is that cash?”

So far, the feds have spent $4 trillion on pandemic relief and rescue. There are 330,000,000 souls in the United states so that figures out to about $12,100 per capita. For those of you who received the $2,000 of “free” cash, it only cost you $12,100. Those of you who didn’t qualify for the stimulus money, well you still owe the $12,100.

Sorry about that.

Next, we need to think about where the government gets this money. It gets it from you either directly (income taxes) or indirectly by taxing businesses. Remember, when the government taxes Home Depot and Safeway, those companies pass the cost on, so you pay more for a pair of pliers or a can of beans.

Another nifty little fact is that when government extracts money from the private sector, it takes money from productive endeavors that produce wealth and puts it in the hands of politicians who don’t. In this case we have the feds handing out “free” money, financing pet projects, bailing out local and state governments, foreign aid, and lots of other “needs” that don’t produce anything but debt. This money has to be paid back and it is we, the private sector, who will have to come up with it. Government skims money we could have used to produce goods and services thereby creating more wealth.

When the central government extracts more and more money from the private sector, the economy contracts and wealth creation slows. History shows us that this scenario eventually results in economic collapse. Look at Cuba, the Soviet Union, China before 1990, and Venezuela. They embraced this economic model to their detriment.

Would the American people really want this stimulus plan if they knew what is really cost them? I think any loan shark would loan you $2,000 if you signed a note for $12,100. It would probably be a better deal in the long run.

It is time for our politicians to stop telling us what we want to hear and start acting in the best interests of the American people instead of paying for government boondoggles such as handing out “free” money. They should be doing what they can to encourage economic growth through support of the private sector. Create a more friendly regulatory environment, lower taxes, and just get out of the way.

If someone has a good paying job, he or she doesn’t need a stimulus check. The politicians need to quit trying to rescue us with our own money. You can earn a lot more votes by creating private sector jobs than by trying to deceive people into thinking you rescued them when, in fact, you are making their situation worse.

They say there is no such thing as a free lunch. Well, there is also no such thing as free government money.  

Bob Bell is a civil engineer who ran for Senate in 2012 and is the author of Oh No! We’re Gonna Die Too: More Humorous Tales of Close Calls in Alaska’s Wilderness

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  • Instead of talking about 330,000,000 souls footing the bill, I’d rather think of the 145,000,000 taxpayers.

    Just sayin’

  • After the Great Fire Of Rome of 64 (one of many), the Emperor Nero debased the denarius from 4 grams of silver to 3.8 grams in order to pay for rebuilding of the city. From about 211 BC the currency had remained fairly stable for about two centuries until emperors slowly, but inexorably, decreased precious metal content, so that by the mid third century coinage had almost no intrinsic value. They went from the denarius to the double denarius (mostly copper) to price controls to total market collapse. Want to be a billionaire? The Venezuelan bolivar, introduced in 1879, was replaced by the bolívar soberano in 2008 at a rate of 1,000 to 1, only to be replaced by the the bolívar fuerte at a rate of 100,000 to 1 in 2018. Coincidentally, the original bolivar (in coin) contained 4.5 grams of silver, the same as the original Roman denarius in 211 BC. An original bolivar coin trades today for about $10, the new bolivar traded at 1,984,823 to one dollar as of last Friday.

  • I must have misunderstood the system. I thought it was more like a ponzi scheme, where only people on the back end would get screwed, along with treasury note holders.

  • Thanks, Bob. Real simple. It’s almost like when we traded our little sibling a nickel for their dime since a nickel was bigger. But this is worse. Much worse. But not much different. Our sibling was happy. Deceived, but happy for a while. And we are happy for our shiny nickels as adults.
    I hope people realize this when they vote they should vote for the guy NOT promising us big nickels. Surely we have grown up.

  • First you take peoples money away quietly and then you give some of it back to them flamboyantly.
    Thomas Sowell
    A quote the brilliant economist stated when talking about this very subject.

  • “When the central government extracts more and more money from the private sector, the economy contracts and wealth creation slows.”

    This isn’t strictly accurate.

    The government does spend all of the money it takes from us and the overall effect is to shift consumer spending from goods and services that consumers demand to goods and services that the government demands.

    Business profits still ensue, workers get hired, etc. with the difference being that the mix of businesses that produce things the government values get promoted and the others suffer.

    It’s a step toward the command economy of communism/socialism where a government bureaucracy decides what gets produced and sold.

    Then instead of tens of millions of independent consumers making free choices that producers react to by creating in demand goods and services we’ll have nameless, faceless government bureaucrats doing it for us.

    Enjoy the few thousand dollars of unearned benefits that your political masters are buying your loyalty with, though, because it’s not permanent…just a step along the road leading to your complete enslavement.

  • What some find scary I find amusing. Having but one child who, at the doorstep of being considered a “senior” and that person childless there will be little cost to me or mine. YOUR children, grandchildren and any great-grandchildren will be paying off the free money you gave me.

    Thank You!

  • The world and Americans never needed their stimulus checks neither under President Trump nor now under President Harris.
    It just about making the American people feel good government cares for us while they take change posession holder over our own car so to speak.
    Those who recieved a stimulus check should had returned the check as insufficient funds.

  • Agree, but I think there is a new narrative. That being the debt doesn’t matter because it doesn’t need to be paid back. Cash is simply distributed by the federal government at their whim on an as needed basis. Which puts the states at a huge disadvantage as they must still balence their budgets. I’m thinking we should eliminate federal income tax and instead let states tax more since they must, at least try visually, to keep a budget and can’t declare bankrupcy.

  • Mr. Bell makes an elementary mistake here, “…when government extracts money from the private sector, it takes money from productive endeavors that produce wealth and puts it in the hands of politicians who don’t.” Money from the private sector produces wealth in a couple of ways, either by enriching those who hoard their wealth individually, and thus, produce nothing other than a large bank account at their disposal, or putting it back into circulation by investing it in capital projects, such as business ventures that actually benefit society (think food production, health care, manufacturing). If the money doesn’t go back into circulation, it is, for all practical purposes, wasted.
    The 2017 Tax Cut for the Rich (we’ll use the real name for it, not the one that the GOP made up to make it look like it would be a good thing) was supposed to put the money into building new manufacturing and improving existing industry, but mostly went into buying back corporate stocks and enriching CEOs and stockholders, which did nothing much at all for you and me.
    Government isn’t meant to do what business does. If businesses did what government was meant to do, we wouldn’t need government. But businesses don’t because it isn’t profitable. Likewise, government isn’t meant to do what business does, which is why it should stay out of business ventures. Mr. Bell doesn’t seem to understand that.
    The money, of course, isn’t free, but it is darn close to it. The US Treasury can now borrow at interest rates that are essentially free, around 0%. That’s as close to free money as you will get. Will it need to be paid back? Of course, but until interest rates go up, the US government has use of the money loaned to it at virtually no cost. Sounds like a really good time to build those roads and bridges and train and water systems and electrical grids and health infrastructure projects and a whole bunch of other things that have been let go, because if we don’t do it now, it will only get more expensive down the road.

  • No, they are not going to recover that money in taxes. They have borrowed it, and put us deeper in debt to China (the only country that can loan us that much without blinking an eye). Well, it could be worse…. Trump wanted the last stimulus checks to be even more..

  • GREG R, Keynesian monetary policy, like socialism, may sound good in theory, but every time it is done the nation ends in failure. Rich people don’t remove money from the economy to stuff into their mattresses, they spend it on Cadillacs and boats and airplanes, all of which could be made by high wage earning Americans unless the government policies drive these manufacturing jobs offshore. Some things government can do well, as outlined in the Constitution, like the common defense and prevention of monopolies (gosh, what ever happened to Sherman Anti-Trust?). But most things are better done by private enterprise. By the standard of living in some places where I worked (where a family lived on about $72 per year) we are all filthy rich.

  • Greg R went to the Socialist School for Unicorns.

    Bell does a good job laying out the facts.

  • UAF had an excellent course, Money and Banking (300 level economics class), that at least one person here could benefit from.
    For example, if some rich guy “hoards” his wealth in a bank rather than spending it the money isn’t “for all practical purposes, wasted.”
    When you go to the bank for a loan to buy that home or new car or whatever where do you think the money comes from?
    It comes from the savings of other people…so the more they save or “hoard” the more available for you to borrow.
    And how about that interest rate? The intersection of supply and demand determines price…interest rates are the price of using someone else’s money.
    So…the more money that other people “hoard” the cheaper it is to borrow.
    What some people miss is that having those evil wealthy people putting their money into the bank actually benefits them!
    This is how money and banking works…at least until the government gets involved and screws it all up by waving their magic money creation wand all over the place while simultaneously manipulating interest rates.

  • Greg R is the only one telling the truth. The last tax giveaway to the corporations and the rich did nothing but increase the wealth of a few and put the debt on the shoulders of the many. The tax giveaway is even set up to continue for the rich and expire for the rest of us.

    Bell is a dinosaur that continues to push the trickle down theory which is a complete failure for every one but the rich. The trickle down received by most people is getting peed on by the corporations.

    Rich conservatives spent billions telling the middle class conservatives if they keep believing in what they are told they will become like them, which we know if a complete lie.

    If the trickle down worked wages would have kept up with inflation which they have not. I was paid $12.50 per hour driving truck in 1976 that would be $57.00 per hour how many truckers are paid that?

  • I wonder why we can’t reply to comments anymore.

    • I will address it, I promise. Lots of bugs to chase. – sd

  • I would suggest both Greg R. and Harborguy take the free online course “Econ. 101” offered by Hillsdale College. Professor Wolfram spells things out in clear, easy to understand, English.

  • Hillsdale College too much conservative indoctrination for my taste.

  • Just figure your only going to get 10 cents on the dollar return from government.

    That’s because they waste 90%, whether it be on gas stations and command headquarters in Afghanistan or buying ferries and re-selling them to foreign countries for, wait for it, 10 cents on the dollar!

    Lots of times whole agencies just lose track of millions/billions.

    It’s really, really hard to keep track of that much money. Just easier to print more. Think of that when a bag of potato chips hits $10.

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