I’ll Gladly Pay You Tuesday…

While I was at work today an interesting news article came through the internet tubes. This article discussed how The Fed was going to lower the prime rate by at least .5% at the upcoming March 18 meeting. In fact, Wall Street was predicting it with 100% certainty.

Wall Street is in a great position to pressure the private corporation known as the Federal Reserve. Wall Street can accuse them of ruining the economy if they don’t lower the interest rates (and we’re already heading into recession). We’re approaching a crossroads – a fairly bad recession while the economy “sheds” it’s speculative-bubble values, or we devalue the money by pumping a lot more of it into the economy so it appears as if there is growth. Wall Street thinks that this is an easy recipe: Take a shot of bad recession (maybe a 2% loss of Gross Domestic Product), followed by a chaser of a 5% inflationary money devaluation and don’t we get a net 3% gain in GDP? (Imagine a barrel of oil costs $100. After 5% inflation the same barrel costs $105. We have now increased the amount of money spent by 5%, which increases the GDP by 5%.)

They’re playing high-stakes economic “chicken” with our future.

Neither one wants to blink.

Wall Street will win this stand-off – because this presidential administration has decided keeping the GDP positive is the most important economic indicator (look back through all the presidential addresses). Even if everything else has gone in the crapper, they will still claim the economy is growing and things are great because the GDP is positive. Even the tax rebate – gaining 2% for this year’s GDP by stealing 2% from next year’s GDP? Sounds like robbing Paul to pay Peter (as my grandmother used to say.)

People finally realized that it was just a game. It was just one big guessing game. A game where if “they” play it better than us, they get to keep so much wealth that they don’t know what to do with it; while the rest of us get more uncomfortable every year. Now that we’ve stopped buying stuff with money we do not have, the economy is falling fast. Real estate prices are falling because people realized that it was a really dumb idea to pay more for a house than they could afford. (as long as the price keeps going up 15% a year it will be a great investment, right?)

It worked for awhile. As long as the number of dollars in your accounts and your paychecks kept getting bigger – people stayed happy. Even if those bigger paychecks would buy them less food. As a society we tend to focus on how much money we make; not on the value of our money and time and lives.

If you do a little research, it is easy to find that percent of wealth in the top 10% is increasing fast, while the bottom 50% is losing out. It’s an economic war. “They” are doing everything they can to get their people in office so they can pass their laws so they can take a larger share of the world’s wealth (thus taking it away from the rest of us). It is a game to them, called free-market capitalism, where they can use any tactic to get more of your money. They do this by making you pay more money for goods and services, while paying you less for your work.

But wait, you say, your paychecks are bigger – and you shop at Wal-Mart and items cost less. You shop at Wal-Mart and pay less for an item than you used to – but the value of the item is a lot less relative to what you paid so it’s a net loss. In the long run, you are paying more for those goods – because you have to buy them more often.

Which do we listen to: our Monkey Brain or our Human Brain? The Monkey Brain being what it is; it creates a positive emotional memory based on the simpler idea of the item costing less. Our Human Brain is probably too busy thinking about all of those work-hours to really think about the Wal-Mart problem. The happiness the Monkey Brain got by our increasing IRA’s and home values was just enough to let us avoid facing the real problem – everything costs more than what our jobs pay us. We’re being coerced into spending more of our time working so the wealthy few can keep more of our money.

There’s a lot reasons why I’m doing the Year of Living Frugally. Among them is our economic situation. “They” have skewed the rules too far in their favor, so I refuse to play the game until things get a little more fair for the majority – the ones who do the real work in this country.