Posts Tagged ‘credit’

Government Intervenes Deficit Spending: Will this help?

May 31, 2009
Or will it end all hopes of recovery?

According to CNN, the government has pushed the debt over$9,542,000,000,000 with the intention of stimulating the economy. The large majority of this money is trying to stabilize banks and “make credit more accessible”. The logic behind this is that in times of economic growth, interest rates are low.

However, interest rates cannot sink below inflation rates without massive bank failure. This is because the rate at which the real value of loans decreases due to inflation and the rate at which the real value of loans increase due to interest balance when these rates are equal. So, banks can only make wealth when their interest rates are higher than the inflation rates.

We should now realize that the intervention in our banking industry will NOT help the banks, but rather cause permanent damage. While curing temporary illness, the government has injected a poison: inflation. With an approaching fivefold increase in total currency in circulation and with artificial competition in the banking industry, not only will inflation rates increase rapidly, but banks will not be able to raise interest rates to keep up.

The federal government has already applied regulations that will prevent the banking industry from increasing suddenly and steeply. The result of this will be bank failure, followed by hyper inflation and ridiculous interest rates, and then ultimately the fall of the global economy.

It is a sad thing to predict, but no other result can come from this print-and-spend government and its attempted control of the credit market.

Democrat-Controlled Legislatures Affirm Bill to Allow Conceiled Carry in National Parks

May 21, 2009
The Senate voted 67-29 and the House voted 279-147 for this bill.

While this seems a wonderful headline, it was simply an add-in compromise to get a bill regulating the credit card industry passed. This gun rights for regulation trade seems fair to the NRA, but even these new gun rights seem to worry the National Rifle Association. Says a spokesman for the NRA, “anything can happen”. This spokesman anticipates some “ghost” in the bill that may restrict or prevent this new expansion of ownership rights.

The NRA may fear some trick in the bill, but there isn’t much else to fearĀ from this newly passed legislation, which also “cracks down” on credit card fees. It entails regulations that keep companies from issuing 18 year-olds credit cards and that keeps credit card companies from “double-cycling” and increasing interest rates as they please.

While such regulations are seemingly harmless, more are said to come. The purpose of these regulations is to soften the legislature for a more burdensome “salvo”.

Seeing as more regulations are coming, when this next round comes, we must do our best to fight it.