I have become aware that for to few older people understand much about economic principal causes and effects. I met a 60 year old gentleman man recently that asked where I was from and when I told him Towner, CO he started on a tirade on how President Trump says that only coal and nuclear were the only answers for our energy needs.
When I told him to look up the levelized cost of the different methods to produce electricity he would find a very different answer.
The gentleman then basically told me not to try to change what he thought.
This reminded me of a study a few years ago involving thousands of adult Americans. The result facts was that 40% of people had what they called “Self-Inflicted Ignorance,” and they will ignore facts if they do not match their thinking.
Senator Moynihan, who was New York U.S. senator for more than 20 years, once said “Everyone is entitled to his own opinion but not to his own facts.”
So, here goes. Econ 101.
The first basic fact to remember is that new black ink wealth must come from the earth through “Food Fiber and mineral production. Everything else is red ink and increases the National Debt. Why is this? Because society has very little cost producing it.
The farmer plants the seed, the grass is already there for the livestock, the minerals are already there, we only have to find it. Mother Nature did the heavy lifting we only had to help a little.
President Trump brags about the record high Dow and blames the terrible inflation on Biden. Both facts are quite phony as a $3 dollar bill but have a common cause. During Trumps first term, the Dow shot up and the commodity index went the opposite direction, and I put a note on the graft (enclosed) that means big trouble down the road with bad inflation. Raising interest takes money out of the economy to try to bring it back into balance with goods available. The agriculture industry is extremely sensitive to interest rates because it operates on more borrowed funds than most of other groups.
Inflation is triggered by too much money chasing too few goods, and Trumps first 4 years saw 8.8 trillion dollars of red ink dumped in the US economy with corresponding increase in national debt. When Trump was first elected, the national debt was 17 trillion and it is now 38 trillion and headed to 40 trillion. This $121,000,000. Debt for every person in US today.
Inflation can take a couple of years to reach its peak after triggering event, and a extended time to cool it. The Federal Reserve board uses interest rates to control inflation.
I am sorry, but I have not read any comment by any economist on a fix for the hole we are in. Dr. Dalstead, where are you??
Remember the record high Dow is fueled by red ink dollars. It looks like 1929 was a cake walk compared to what might be in front of us.
There is a connection with 1929 crash for the agriculture economy today. After the crash of 1929, congress deemed the depth of the crash was stocks could be sold short. This is where one could sell stocks that they did not own.
In about 1932, Congress removed the short sale from stocks but left in on commodities.
This is a huge problem for farmers. True supply and demand is fixed supply is offered to a fixed demand for the farmers grain. Under current price discovery, the supply is unlimited and demand is still fixed.
Many years ago, governor Lamm asked the ag office to take a look at the commodities trade, and first assistant attorney general Robet Hill did the research. When Mr. Hill handed me the report, he had the following comment. “Yes, we can show that the commodities trade is negative to the economy of Colorado, but that industry is so huge that they can buy congress with pocket change and they do. More money flows through the commodities exchange in one day than through the stock exchange in a week or more.
If congress would do for farmers crops what they did for stocks in 1930’s, we could quit losing farms every day.
