In The Know: Should The Government Stop Dumping Money Into A Giant Hole?

I love this video. Watching it makes the countless bailouts and other federal financial shenanigans slightly more bearable.

And yes, the government should most certainly stop dumping money into a giant hole (A.I.G.).

Two bucks saved is two bucks earned!

I discovered this tip a few days ago while perusing the Kashi web-site. If you head on over there, you’ll see a button in the upper right corner urging you to “join the community“. If you click the button, you’ll be taken to a form asking for your name, e-mail address and to choose a user name.

Click the Wheat Sprigs!

Kashi has a unique spam bot verification system where they ask you to click the pictures of two wheat sprigs, so don’t skip over the pictures! Once fill in your info, read and confirm to their terms, and click the wheat sprigs, you’ll be taken to your user page with a button prompting you to view and print your $2 coupon!

Pretty painless way to save two bucks and get a great tasting pizza.

Income tax is avoided by the rich and paid by the middle-class

Photo credit to OhioProgressive.

In the superb state of Massachusetts, where Mr. Money currently resides, three ballot questions lie alongside the state senators, representatives and presidential candidates. These three ballot questions propose to eliminate the state income tax, decriminalize up to one ounce of marijuana and ban dog racing. Mr. Money will most likely vote yes across the board, but for the purposes of this site, let’s discuss question #1 and its pros, cons and why Mr. Money is voting in support of eliminating the Massachusetts state income tax.

Amongst this vast vault of reasons, avoiding taxes is simply not one of the reasons. Shockingly, it affects me in no way, as Mr. Money will have such a low taxable income this year [due to being "retired" for most of the year] that all my income taxes will be refunded. So it’s not a hatred of taxes that drives Mr. Money to vote yes on question #1, rather it’s a love of freedom and a firm belief that government should not tax positives, like a worker’s wage, but rather should tax negatives, such as pollution, traffic and drug addictions (e.g. increase cigarette and alcohol taxes).

In a truly democratic society, we should not discourage people from working hard. The income tax does so by punishing someone for earning an income by taking a portion of that income. The income tax thus encourages individuals to lower their taxable income and find ways to avoid paying a tax. Usually, this income tax is avoided by the richest amongst us. They are either rich enough to hire the best tax attorneys and accountants who can manipulate accounts to severely lower or completely eliminate a tax bill or stingy or greedy enough to straight out cheat. In other words, an income tax most directly harms the middle class as they are the ones most likely to pay it.

So if you live in Massachusetts, send a message to the state government and vote yes on question #1. Truthfully, the government will likely ignore the public, even if we do pass question #1 so vote yes on it knowing that public services will not be affected. Mr. Money believes a tax is necessary, and proposes taxing the negatives of society as noted above, including pollution, drugs, crime, traffic, over-consumption (via a non-essential goods sales tax), and even possibly an excessive wealth tax. However, to directly tax an average worker’s wages is immoral and counter-productive. Let’s find a better way Massachusetts!

Google Bench Ads

Photo credit to alesh_.

You may have noticed recently that Google ads are now shown on this site. Though I am Mr. Money, my last name does not pay the server bills! Do not worry faithful readers, the ads will be kept to a bare minimum and as unobtrusive as possible. For now only the one 250 x 250 advertisement block will run in the far right sidebar. We’ll watch the monetization results over the next month or so and go from there.

From crunching the numbers, the one ad should suffice, though the more love this site gets on the social networks (thanks reddit and stumbleupon visitors for the recent love) and across the various inter-tubes, the less often you’ll hear me talk about the ads!

Google Ads infiltrate Wolfenstein 3D

Photo credit to buggolo.

My digital door is always open, so feel free to send me an e-mail or leave a comment if you have any concerns, questions, suggestions or just wish to chat.

The dragon knows to save...do you?

Photo credit to m.prinke.

As I mention in my about section, my online savings account brings in $50 a month, which is no giant treasure, but it pays for almost my entire monthly iPhone bill. Considering the recent crashes in the stock market, I’ll gladly lose the extra 2% or so the market generates over time for the guarantee that my money is safe and secure. Over the course of history, the stock market generally returns a 5-6% rate per year. As these online savings accounts are right now offering a rate around 3% and were up to 5-6% earlier in the year, they’re a great way to save and at least keep up with inflation, all while knowing that your money is safe and sound with the FDIC’s guarantee. Mr. Money advocates taking risks in order to get great returns, but first we must have a safety net and an online savings account is a great way to build that net.

Personally, I’ve used HSBC Direct and ING Direct and have had nothing but pleasant experiences so far. Even if you’re only able to put away a few dollars at first, eventually the savings will build and snowball and by then you’ll be encouraged to put as much money as possible into the savings account since you’ll actually see real results quickly. Sure, there are higher yield investments out there but considering that these savings accounts are FDIC insured and that the interest is guaranteed, it’s quite difficult to beat these accounts as a no hassle way to passive income. Here’s a run-down of three quality online savings account:

1. HSBC Direct
   • Branches in some states.
   • Refunds 100% of other banks’ ATM fees.
   • no minimum balance
   • $1 to start
   • No fees
2. ING Direct
   • No physical branches
   • $1 to start
   • no minimum balance
   • No fees
3. FNBO Direct
• No fees
• $1 to start
• no minimum balance
• Branches in some states.

Any of those banks would make a fine choice for an online savings account. They all offer a similar savings rate with no fees and no minimum balance. Personally, I’m a big fan of HSBC Direct and their policy of refunding all ATM fees. The important thing is that you open an account now and start savings. If the economic news of the past month has taught us anything it’s that savings accounts are important to individuals and our economy as a whole. Living credit card to credit card is no way to live and I urge all my readers to save, even if it’s only a few dollars a month. Your future self will thank you!

Lady riding a bicycle in Tuscany

Photo credit to pasotraspaso.

Over the past few weeks we’ve discovered there is only one sure aspect of our current economy, and it is that we are in uncertain times. Some analysts believe we’re on the verge of hyper-inflation, others believe we’ll likely see deflation, while still others foresee stagflation on the horizon. Uncertainty is the one constant we have now and in such uncertain times it is wise to cut spending, invest in self-sufficiency and hold at least a small reserve of cash, food, and water at home. Now, Mr. Money does not believe we should all put on our tinfoil hats and jam on the panic button, but being cautious is never a poor decision, especially in uncertain economic times. It is not only in that light but also in general that Mr. Money brings to you today’s tip.

Buying a used road bicycle is one of the single best investments a capable person can make. By capable I refer to those of us fortunate enough to have full control over our muscles and limbs and in good enough shape to move. Obviously, if you have a pre-existing medical condition consult with your doctor before buying a bicycle or venturing into any new strenuous activities. In fact, the best and safest thing to do would be to consult with your doctor no matter your perceived current health.

Assuming you’re fit enough and of sound mind, a used bicycle can easily and quickly pay for itself. Even now, with a heightened demand for bicycles due to high gas prices a good used bicycle can be found for $100 to $400. It might seem like a lot of money but if you replace driving with pedaling you will quickly recoup the upfront cost. In fact, a few months into biking your improved health, decreased dependence on fossil fuels, and increase in confidence will match and possibly surpass nearly any other investment you can make. The ROI is literally off the charts.

Dark Bicycle in the night

Photo credit to bamse16.

Mr. Money sees many of his friends, family and even strangers take a great interest in their wealth, but few seem to carry over the same concern to their health. At its core, health and wealth are both economic decisions. To pursue wealth while damaging your health is simply a poor economic decision. Consider your body and mind as investments. Just like you can take a pile of cash, tuck it under your mattress and forget it, you can do the same to your body by ignoring its maintenance. In both cases, inflation will slowly decrease the value of your pile of cash and your body. Regular exercise, a proper diet and moderation are like a high yield savings account for your body. Taking care of yourself is essentially a guard against inflation.

So we return to the bicycle. Mr. Money sees many, many commuters who are either frustrated sitting in traffic or absent minded, moving their boxes on wheels from point to point without enjoying the journey. Too many times we consider our lives based on achievements rather than enjoying each day. Many of us simply do not consider how much of our day we waste performing activities we do not enjoy. It is for these reasons that Mr. Money quit his day job, abandoned the car and public transportation, and bought a bicycle and began riding it everywhere while enjoying life every day.

Mr. Money's Super Sleek Single Speed Shogun Cycle

In April of this year Mr. Money purchased a used single speed Shogun from the non-profit used bike shop Bikes not Bombs in the Jamaica Plain neighborhood of Boston for $350. Since then, I’ve easily saved that much money by not spending it on insurance premiums, gasoline, public transportation fees, gym membership and by making more frequent trips to the supermarket I’ve had less food spoil and get thrown out too. Though I’ve had to spend a few extra hundred dollars on supplies and repairs for the bicycle (new tires made from Kevlar, extra tubes, lights, helmet, etc.) I’ve still saved money over the past seven months.

In addition, I’m in much better shape than I was in April, have gotten sick much, much less frequently and overall have more energy each day and actually enjoy the journeys to my destinations, rather than simply sitting in a car, bus or train wasting time. Not only does my bicycle save me money, but often it also saves me time too! Mr. Money lives in the fine City of Boston, which is small enough that a bicycle is often the fastest mode of transportation! My bicycle can get me to nearly anywhere in the city in under 30 minutes, which is a feat rarely achieved by car or public transport!

Even when the bicycle takes a few more minutes than other forms of transportation, you’re still getting exercise in and essentially moving for free (or very, very close to free) while also having time to enjoy the sights. If you do not own one yet, Mr. Money highly, highly recommends you save up enough cash and purchase a used bicycle as soon as possible. It is literally one of the best investments you’ll ever make!

Do not worry though, faithful taxpayer. President Bush reassured everyone that the bailout will work, though it will take time to re-grease the gears of the economy, going so far as to emphasize “that the program must be effectively designed and not rushed into action.” Keep in mind, this is the same President Bush who just last week urged swift action to push the bailout through. Apparently, we now have more time.

Meanwhile Barney Frank, head comrade in charge of the bailout bill, continues the double speak of comrade Bush and rails against the free market. He believes the free market is to blame, unfortunately for Frank, that is only half true. Sure, the greed of the market helped create this credit crisis, however the marketplace was enabled by the government’s push for homeownership, and the lax eye of the SEC and its loosening of existing regulations. If anything, Frank should be lambasting the SEC for allowing firms to provide oversight on themselves. If left to their own devices, of course firms will take ever exceedingly dangerous risks to pursue profit, it is literally their life goal to do so. To blame firms for pursuing profit is like blaming a child for going after candy. It is irresponsible and shows Frank’s poor understanding of our economy.

Increasingly, Mr Money believes the global credit crisis is being purposely manipulated by the government to decrease bank values in order to allow the federal government cheaper acquisition prices and make consolidating economic power under the federal government easier. The Boston Globe reports:

The Treasury Department is considering taking ownership stakes in many United States banks after emergency interest rate cuts by the Federal Reserve and central banks around the world yesterday failed to end a global panic in financial markets.

Pretty soon the U.S. economy will resemble the one in Iceland, where every bank is now under government control. The unfortunate truth is that more banks will fail. Despite the bailout, or perhaps more correctly put, inspired by the bailout more banks will fail next year. We’ve created an economy where banks are rewarded for failing and we should thus expect more banks to fail. The bailout simply delays failure and magnifies its effect on the economy via hyper-inflation. Mr. Money can’t wait until President Obama is blaming the huge crisis to come on Bush and company, even though Obama was at the same table as Bush and McCain and promoted this bailout as much as any other corrupt politician.

Allison describes the Federal Reserve as the Third Bank of the United States, however unlike previous central banks, this one does not use sound money to back its currency, thus leading to our over-inflated and under capitalized economy. The first step of righting this ship is to promote sound monetary policy and to reign in the excess of our current fiat currency. The refusal of Bush, Obama, McCain and their comrades in congress to end the Federal Reserve and set our country’s currency right shows their true colors.

We have not seen the credit markets become unclogged, as the politicians promised they would, rather banks continue to hoard cash and assets as they’re still afraid of market valuations. The Federal Reserve is now sending out $900 billion in loans to the petrified banks in an attempt to open up the credit lines. Our consumer credit based economy is literally fading away as the credit dries up. Why the government does not simply begin sidestepping the banks and loaning out money on its own is anyone’s guess. Perhaps it’s just too logical of a move for this cowboy government.

Faithful readers of my personal blog will know I’m no fan of President Bush and his unique brand of economics, but I’m optimistic that there is hope yet for this economy. Why is that? Well, the very corporations who so desperately needed a bailout to stay afloat are now having second thoughts. That’s right, the corrupt corporations may save us all from the corrupt congressmen, for once. Apparently, many bank CEOs are scared to accept the newly approved bailout because they do not want to forego their massive bonuses and restrict their salaries. James Doran of The Observer writes:

Sources close to Goldman Sachs and Merrill Lynch indicated the banks might choose not to participate in the bail-out as there is a growing view on Wall Street that the market may be bottoming out.

Two weeks ago we were on the brink of economic apocalypse but everything is OK now! Mr. Money does not like these shenanigans and considers it further proof that CEOs should never earn as much as they do, for they simply cannot have a big enough positive impact on their firms to justify their extravagant salaries. Popular sentiment amongst Fortune 500 CEO’s might ride against Mr. Money, but academia and common sense is on his side. Most of the time, removing leaders from the equation will only serve to strengthen the group and improve the quality of work!

In other Federal Reserve news, the pseudo government agency is now planning on buying up unsecured short-term debt in order to prod companies into lending commercial paper again. Mr. Money mentioned last week that the bailout bill was a slippery slope and we’re already tumbling down that slope as the Fed tries to buy anything and everything in sight in order to squeeze a little bit of credit out of the economy. Again, why not supply the credit directly?

Many economists now think we’re already in a recession or will be in one by year end. Mr. Money is on the side that believes we’re already in a recession, as he’s seen steady decreases in consumer confidence and spending over the past months, which is bad news for a U.S. economy heavily dependent on consumption. Even amongst my friends and family, the tightening wallets are in plain sight. Overall, a decrease in consumption, if accompanied by an increase in savings (which is not certain due to the risk of hyper-inflation), will lead to a stronger economy than the one we’re presently mucking about in.

Speaking of getting stronger, it seems the American public is now taking matters into their own hands. Numerous sources are reporting that former Lehman Brothers CEO Richard Fuld was punched in the face while working out at a Lehman Brothers gym after the bankruptcy news broke. Apparently Fuld was on a treadmill when an individual put down his weights, walked over and knocked Fuld out cold.

Speaking of getting knocked out (are you loving these segues?), over the weekend our national debt grew to such epic proportions that the national debt clock in New York City could no longer handle the massive number. Two digits are being added to the clock to accommodate the ever expanding federal debt.

As I said Friday, bailouts beget bailouts and AIG is racing to prove me correct, as it already spent $61 billion of its $85 billion federal loan, without selling a single distressed asset. AIG will no doubt soon be back before the federal government asking for another dose of taxpayer funded handouts.

While we’re talking about AIG, did you hear top executives at the failing firm went on a week long company paid retreat. The Business Sheet tries to justify the luxurious paid vacation by pointing out these executives need a break from their bruised and battered business.

Worse yet, AIG plans another getaway at a $400 a night hotel and instead of cutting back on spending actually considered running an ad campaign to explain why they were having these lavish retreats. No, I’m not kidding, AZcentral writes:

AIG considered buying advertisements to explain its position, only to be told by its public-relations consultant, George Sard, that it would be “a really bad idea.”

See how incompetent some of these top executives are and why their companies would run smoother without them? The idea of Michael from the TV show The Office immediately springs to mind. The good news is that AIG decided to cancel the second retreat, though only through fear of the huge public outlash that would have occurred, not because it made financial sense (which it did).

In completely unrelated news, it’s time to “tone things down”, according to the Boston Globe. For financial executives who are used to casually shopping for “$18,000 watches and $90,000 BMWs”, a return to conservative money practices will be needed. Let’s all feel bad for the super-rich for just a moment.

Moving on.

The Boston Globe also reports businesses are spending less and saying no to new purchases. Mr Money believes it’s about time everyone, consumers and businesses took a look at their spending habits and realized that credit consumption is dangerous. Unfortunately, we live in a debt based economy, where saving is not rewarded either.

CNN reports that 80% of Americans are reporting stress due to the economy. Who would have known that economic apocalypse could be so stressful? Oddly enough that leaves 20% of Americans who are not stressed out. I imagine these are the top and bottom 10% in terms of income. If you’re already at rock bottom, nothing seems worse than your current spot, and if you’re literally swimming in dollars, you probably could care less that hyper-inflation is right around the corner.

Perhaps we should stop stressing and learn to embrace these gloomy economic times, as the New York Times found out that our health actually improves during economic downturns. Apparently, as economies decline more and more citizens spend time doing healthy things like cooking their own food, exercising, and taking their kids to the doctor instead of working and eating out.

So not working so hard can be good for your health and Ron Paul argues, Congress doing nothing would have been great for our economy too. In his weekly column, Dr. Paul, states that:

Sometimes doing nothing is much better than thrashing about aimlessly. When one is caught in quicksand, for example, or when one doesn’t understand economics and finds oneself in the position Congress was in for the past two weeks, with decades of irresponsible monetary policy coming to a head. Why should we trust the same people who said just a few months ago that the economy was perfectly sound?

Thank you congressmen Paul for being a voice of reason during this chaotic time. If only our government listened to the great economic mind we have working for us we’d be multitudes better off than we are now.

On the other side of the spectrum, we have the bumbling, clue-less Barney Frank running around coercing his fellow congressmen into the fleecing of America. Not satisfied with throwing $810 billion at the banks in an attempt to coerce them to lend money, Frank looks forward to see if there are any other places he can throw billions of dollars and tons of regulations in an attempt to fix problems. At issue here is that the federal government encouraged banks to violate sound business practice and lend money to risky people. Of course a lot of those loans were going to fail, and regulations actually created the issue. Sure, regulations could be used in other parts of the industry to ensure we are not over leveraging assets, as we currently are but regulations and money are not the catch all solutions that Frank believes they are.

Though home prices are dropping in nearly all parts of the United States of America, here in Boston they’re still sky high and don’t seem to be dropping anytime soon. Boston is slightly unique though, in that it is a tiny city physically with a large population and very well educated workforce. Our specialties in technology, health care, and education seem well primed to ride the city through most economic downturns, though a severe depression would obviously impact everyone negatively. Ira Jackson of the Boston Globe sums up this notion nicely:

Or maybe Boston is best explained as motive combined with opportunity: the need to constantly innovate, invent, and reinvent has long been tied in Boston to resources (both intellectual and financial) and a community that exists largely to nurture and protect that powerful combination.

Peter Drucker, the father of modern management, was the first to understand that we live in a knowledge economy. Drucker might have seen Boston today as the equivalent of a factory of the future, where smart people use their minds, fueled by investors who match ideas with market needs, producing green, clean, and sustainable products for the world.

Hopefully Boston can lead the way into an economy of the future, where we rely on local, environmentally friendly energy to power our homes, cites and transportation.

Now, after passing an $810 billion bailout bill, Congress decides to hold hearings on the financial crisis. It seems odd for Congress to even waste time holding these hearings, after already passing the bill. Perhaps they’ll decide that the overwhelming majority of Americans are right after all and this bill should be rescinded. Doubtful put certainly possible.

As the mainstream media continues to be outed for their sheer incompetence by those they once mocked, take a look at this article by The Register, in which Cade Metz writes about Overstock.com CEO Patrick Byrne who we repeatedly tried to warn us that naked short selling, amongst other over-leveraged stock schemes would lead us to economic ruin.

As I’ve written about on my personal blog, AIG is a corrupt corporation. Congress is now looking into AIG’s part in the the global credit crisis. It truly boggles the rational non-conspiracy focused mind as to why we’re holding these hearings and investigations after lending these corporations billions of taxpayer dollars.

A great article on how the federal government essentially encouraged the current credit crisis to occur. Essentially the government forced Fannie Mae and Freddie Mac to give out ever increasing percentages of their mortgages to low income individuals with doubtful payment potential. As Fannie Mae and Freddie Mac pawned these mortgages off on other banks, we ended up in our current crisis where a ton of banks hold liabilities with little chance of payment.

Next up on the crisis plate will be overwhelming energy demand taxing our aging infrastructure. It’d be great if our government invested in reducing our demand on foreign energy while taking the heat of the environment, but instead we throw the big banks a bone. As the BBC writes, our environment and the heavy damage it is taking right now makes this economic crisis seems insignificant. According to a study paid for by the European Union, the loss of forests worldwide is costing us between $2 to $5 trillion a year. The number is derived via economists who studied how much it would cost to implement the good benefits of forests on our own. The number is startling and further shows why we need to stop wasting money supporting failing businesses.

At least the bailout bill did take a small step towards righting our economy and environment, by including a $20 monthly tax credit for employers per each employee who rides a bicycle to work. It’s not a big credit, and it certainly isn’t going to motivate employees nor employers to switch their whole workforce to bicycle transportation, but it’s a step in the right direction. We need to snap our oil dependence and find new or, as is the case here, old ways of moving ourselves that does not involve fossil fuels.

Next week we’ll discuss a few tips on what items to buy now before hyper-inflation sets in. Enjoy the weekend everyone and please do not panic, Mr. Money will help you ride out these tough economic times so remember to subscribe to the Money feed to stay updated.

Do we even have a choice anymore?

As the House of Representatives plans to vote on a revised bank bailout today, I’m excited to bring you this blog’s first State of the Economy address. Unlike John McCain, I do not believe the fundamentals of our economy are strong. Rather, there are several deep issues at the very core of the United States economic system that must be addressed before we can move forward. A bank bailout is not chief among them, rather our energy dependence, education system, and credit based consumerism are issues we must analyze and draft a new course on, otherwise we will sink.

Though I recognize there are many areas we must quickly improve in order to maintain our nation’s global economic leadership position, there is no need and certainly no time to panic. Let me repeat, the mantra of The Hitchhiker’s Guide to the Galaxy:

Don’t Panic.

The sky is not falling, our economy is not crashing (with or without the bailout). Simply put, the situation is not as serious as our lawmakers make it out to be. Heck, The Federal Reserve already bypassed Congress and simply printed an additional $630 billion and handed it over to the banks. Yet, there is no amount of money that will plug the holes of the befuddled banks. These banks should not be propped up and pardoned for their poor business practices. The banks are failing and should fail. Rewarding banks and mortgage holders for taking unrealistic risks simply punishes hard working Americans who paid their mortgages and lived within their means, saving money instead of spending it.

As the federal government spends more and more money, the value of every dollar earned and saved by Americans loses some of its worth. The U.S. dollar will continue to lose value as the U.S. government becomes more and more bloated, without contributing anything back to infrastructure and development. A bailout for socialized health care, green energy, or free college education would truly help our economy by freeing up small businesses to innovate, rather than worrying about spiraling health care costs for its employees, reducing our energy costs while improving our environment and a free college education is literally a no brainer.

Instead we will likely choose to provide rich bankers who cheated, lied and clawed their way to the top with no regard for our society a nice big bailout bonus, paid for by you and me. Do not let Barack Obama or John McCain or George W. Bush convince you otherwise, the bank bailout is completely unnecessary, will damage the economy and is borderline criminal.

My faith in American entrepreneurs and workers leads me to believe the economy will bounce back either way, though a bailout will prolong the core issues instead of addressing them. In either case, the support of this bailout by the establishment has sealed my vote for 3rd party candidates across the board. As a small business owner I cannot support a bill that will vastly devalue the U.S. dollar and encourage poor business practices.

Bailouts beget bailouts

How much are these really worth?

Photo credit to Tracy O.

Since the first bailout this year of Bear Stearns in March, more and more banks have stepped forward looking for bailouts. Think about that fact for a minute. The bailout of Bear Stearns was done to prevent market panic, and yet here we are months later having set the record for the largest one day point drop in the Dow ever. Since the failure of Bear Stearns, more and more banks have failed and requested bailouts. This fact leads us to only one conclusion, bailouts beget bailouts.

Simply put, we’ve changed the rules of our entire economy. No longer do companies need to earn a profit. No! The new way to make money is to just ask for it from the government! No matter how politicians spin it, a bank bailout encourages banks to fail! Why compete when you can just beg and plead your way to hundreds of billions of taxpayer dollars?

OK, let’s move on and assume this bloated bill will pass the House today. I hope it does not, but my faith in these politicians is on shaky grounds, especially after they explained their real reasons for voting nay on the bill the first time around was for mostly fickle reasons. Basically, many of the Republicans simply did not like Speaker Pelosi’s tone so they decided to vote nay.

Wow.

And to think I actually believed they listened to the cadre of their constituents who called in to express their disapproval of the bank bailout bill. Now you understand why it seems near inevitable this bill will pass. The majority of our politicians are simply too incompetent to stand up for their citizens.

Let me stop here and give massive credit where it is due. My Representative, Stephen F. Lynch (a Massachusetts Democrat), not only voted nay on the original bailout bill but will also vote nay on the Senate’s bailout bill. Mr. Lynch has gained an immense amount of respect in my book, though knowing his blue collar background it does not surprise me that Representative Lynch would stand up for regular Americans. We desperately need more Democrats and Republicans with the confidence and courage to stand up for us against the tidal wave of lobbyists and corrupt officials holding our economy ransom. If you have not done so yet, please call your Representative and let your disapproval of this bill be known. Personally, I’ve called Stephen Lynch’s office to thank him for doing the right thing and voting against the bank bailout.

Let me iterate, Mr. Money does not support a bank bailout. However, if we are to assume that a bailout will occur no matter what, there is one way to bailout banks, while also helping mortgage holders and home owners and minimizing damage to the economy. Once again, Mr. Money knows the best bailout is no bailout. However, if we must do a bailout here’s a better way.

Trickle Up Economics

Theft is Trickle Up Economics

Photo credit to photo808

Think about how rich people get rich. They do not do so by spending, rather they save every cent they can and claw their way to the top. We are supposed to believe that now that they are at the top they will take free money and spread it downwards through the rest of the economy? We are basically supposed to believe that these rich people will now spend, spend, spend, even though that is the exact opposite of what they’ve been doing their whole lives?

Give me a break.

Now think about poor people. They not only spend every dollar they have, they must because rarely do they have anything left over after paying for the most basic of necessities. Not only do they spend everything because they have so little, even when they do get a few extra dollars they usually spend it near immediately on a luxury good so that just for a short instance, they too can feel well off.

This huge distinction between the social and economic behaviors of rich and poor people must be recognized and acknowledged by you, dear reader, before we can move on to the solution to America’s banking and mortgage crisis. The solution is simple, logical, compassionate and fast.

It is with immense pride that I introduce trickle up economics, the saviour of our economy from the death grips of reagonomics. All of a sudden, every bank across the world is crying out for help. They scream and shout that they simply have no money, as they are immensely burdened by shady mortgages that no one can afford to pay. Meanwhile, average citizens across the country are being thrown out on the street as banks announce foreclosure after foreclosure.

Well, with trickle up economics everyone keeps their homes, banks receive cash for illiquid assets, home owners get a little bit of spending cash AND the value of the dollar might actually increase, though at the very least it would not plummet.

The crux of trickle up economics is the creation of a new currency, let’s call it Home Bucks. This new currency will not have the full power of a U.S. dollar, rather Home Bucks can only be used to either pay a mortgage or improve a home. You can’t use Home Bucks for food, clothing, or to pay off credit card bills or any other number of non-home related purchases.

You can however use Home Bucks to pay your mortgage, buy solar panels, wind mills, or other energy efficient home improvements. You cannot use Home Bucks to buy a new TV, furniture, or renovate your home for purely aesthetic reasons. If a renovation is to improve the energy efficiency of your home, then Home Bucks can be used.

To make sure we get the most bang for our Home Buck, all new and existing mortgage interest rates for homes under $1,000,000 will be capped at 5% for three years. This cap will allow mortgage holders a fair chance to pay off their debts without going completely broke in the process.

As people pay their mortgages off with a combination of Home Bucks and U.S. dollars, banks get cash for their previously worthless mortgage paper. At this point, banks can turn in their Home Bucks to the U.S. government for an equal 1 to 1 exchange for U.S. dollars. There is one small catch though, all transactions turning Home Bucks into U.S. dollars are taxed at 50%, on the spot. Once the government has Home Bucks, they are removed from circulation and deleted from existence until all Home Bucks are gone and invalid.

I’ll admit, it’s not a perfect plan. The perfect plan is literally to sit back and do nothing and allow bad business to fail. However, it seems our government is hell-bent on jamming some sort of bailout through the congressional pipeline. At least with trickle up economics, average Americans keep and improve their homes, banks gain liquidity, and the government gets their money back, plus a hefty tax on top. I’ll remain optimistic and hopeful that the House of Representatives will once again defeat the bank bailout bill and stand up for the American people. Though, I’ll restrain my optimism with a realistic understanding that many politicians are simply too incompetent or corrupt to understand the ramifications of this massive bailout bill, I’ll still hold out hope that we the people will win this fight.

Later this week, Mr. Money will bring you the first ever state of the economy address. We’ll discuss what’s wrong, what we need to do to fix it, and how to survive.

Welcome, dear readers, to My Last Name Means Money.

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