Tuesday, April 24, 2007

Political Cartoon Idea

Okay, so I’m no artist, and I’m not usually thinking of political cartoons. But I’ve been reading Larry Burkett’s The Coming Economic Earthquake and this one struck me.

Larry discusses the different instruments that the Fed and the government can use to influence our economy. Between lowering interest rates, lowering taxes, and going to war, the government can hold off economic downturns for a while. However, the natural market correction that must come will be proportional to the dependence on these tools.

It seems to me that the US economy has been living off all three of these tricks for too long now and that when the market correction comes, we will find ourselves in desperate times.

So now to the political cartoon. As I’ve been thinking about this recently, it struck me as very ironic that the very politicians who are turning a blind eye to future effects of their own monetary policies thought it was necessary to bring the Major League Baseball players in to testify about their use of steroids.

So here’s the scene: A baseball player is sitting in front of a Senate committee to testify about the use of steroids in MLB. The Senators are all pointing fingers with “holier than thou” expressions. Yet, behind each Senator stands a doctor injecting these various market uppers.

As I see it, our economy is not only addicted, but now fully dependent upon the steroids mentioned above. Just as with the physical body, our economy will need larger doses to keep up its strength. However, interest rates can’t really go any lower and taxes will inevitably start going back up.

We’ve lost our interest in Iraq and in war in general, but watch, when the inevitable market corrections begin pressuring our wallets, we’ll find we’ve got a few more tricks up our sleeve. Maybe it will be North Korea, or maybe Iran. Who knows, if things get real bad, maybe it will be Russia or China. But God forbid that we go through another depression.

Sorry, maybe I should stop reading Burkett. His predictions have fallen flat so far, haven’t they?

3 comments:

joshMshep said...

Fuuny comic, gotta get someone to draw that.
I used to be a huge fan of Burkett's novel The Illuminati, read it like 8 times. Then I went to college and realized it was mostly a Tom Clancy ripoff. : ]

Archie said...

Chris,

Yes. Stop reading this stuff of Burkett anyway. While monetary policy does have an effect, the best effect that it can have is just to get the heck out of the way and let the market do its thing. What we have seen recently is the economic effect of Bush's tax cuts. It has gotten the government out of the way somewhat.

Tell you what though, if you cut taxes and revenue goes up (which is what has happened over the past few years in Washington) then you haven't cut them far enough.

Anyway, I am more concerned with the baby boomers leaving the work force and beginning to pull their money out of the market to invest in bonds, and live on than I am about monetary policy. I still don't think that it will cause a huge economic slowdown, but I do think that Burkett is full of it on this.

Christopher said...

Archie,

Thanks for your feedback. It's good to know that there is another side to this story.

By the way, do you know of any sites that show charts and graphs of the historical progression of things like government debt, US personal debt, etc. with explanations?