Fire the President

FIRE THE PRESIDENT

Our countries national debt and federal budget deficit is a big problem that does not seem to be getting any better in the near future. This is a problem that the United States has seen before when The Great Depression hit our economy. The Depression taught people how to save their money, spend in cash, and to not have debt. My grandparents’ generation has not had another problem with this because they learned these lessons from the Depression. Obviously the government did not learn their lesson and now we are paying for it. The increasing national debt and federal budget deficit is not an easy problem to solve. Since the government cannot seem to find a way to fix it, we need to start at home. Everyone needs to look at themselves individually and do their part to save our economy.

Ron Blue, who is the President and Financial Planner of Kingdom Advisors, spoke to a Ways and Means committee in the 1980s when we were having a financial crisis with high inflation and high interest rates. He told them that there were four things they needed to realize and implement to get out of their financial crisis. The first point was to spend less than they earn. Seems simple right? An easy thing like this gets overlooked so often and is what gets people into financial problems. Credit cards are a major problem when it comes to spending more than what you have. Consumer credit creates a false sense of security and false sense of liquidity when people buy with money they do not have; which ultimately increases debt. Second, he told them to try and avoid the use of debt. There needs to be stronger bankruptcy laws to keep people and the government out of debt. The laws in place now have been too lenient. If you do not pay local then it does not get paid to state, federal, or so on. If people cannot run their businesses because they have too much debt, they cannot pay the taxes, and the vicious circle keeps going.

The third idea Blue wanted this committee to put into practice was to build some liquidity/cash. Printing more paper devalues our dollar, which is what our government is doing now. When this happens fewer countries want to invest in the U.S. by buying bonds because they see how little our dollar is worth to them. We are living in a global society; it is not just about our dollar in the United States, but how our dollar is perceived throughout the entire world. Legislation has to be more actively involved in encouraging savings and building liquidity. We have the problem right now of credit cards, home value going down, and 401K value going down. To help, the government is trying to print money to get them out of it. This is not going to work in the long run and that is what the Obama administration needs to see right now. To build liquidity/cash, the government could start with income tax. Consumers need to have incentives to save. Once they see how they can benefit from saving, they will step up and get on board with the new ways.

Blue’s fourth point was to have better long term written goals to keep people on track and to not change them all the time. One goal to start off with is to cut waste. Identify waste and programs that are not effective and efficient. The programs that cannot show realistic return are worthless to our economy. Our government does not know how to calculate internal rate of return on programs. They need to operate in a business sense to see if their investments are worth investing in. The government is not a good manager of their investments. Figuring out which investments are good and which are bad for our economy is key. Obama should not be giving out money when they have no control over the business afterwards. After these companies are being bailed out by the government, they are not turning around and making good decisions and benefiting our economy. Hence, these bailouts are a waste of money. Obviously, the government did not see that these were not good investments. The government cannot turn around our deficit problem with the way they operate. Basic fundamentals are needed just like any basic business. Evaluating all programs and cutting out the wasteful ones is a start.

After Blue was done speaking to this committee, one person on the committee mentioned a point that “this might work for the government too”. It all comes back to every person individually. When people learn how to save their money and proper uses of credit cards, loans, etc. there will be a change in our economy as a whole. Everyone needs to not only take into consideration the four principles that Mr. Blue has suggested, but thoroughly understand and implement them into their lifestyles. We have seen in the past that a President is not going to turn things around on his own. Each and every one of us needs to do our part to save our economy because it starts at home.