The Intended Good of the Bailout Plan

Yes, the danger must be growing
For the rowers keep on rowing
And they’re certainly not showing
Any signs that they are slowing

This is the last political post for a while.  I’m sick of it, it’s really getting to me.  I don’t see how some people do it, debating politics every single day.  And with the 24-hour-news-channel generation, there are constantly stories being “discovered” (aka created) so that there will ALWAYS be subjects to talk about, whether they are valid or not.  I can’t take it.

Anyway, I heard a bit of an interview with Paul Winkler, who runs a radio show out of Nashville on Saturdays.  He’s known for his savvy when it comes to the marketplace and investment.  He explained a few of the pros behind the bailout plan (which he supports), which I will now, to the best of my ability, share with you.  Not that I support this plan, because I don’t.  And not like my opinion really matters too much either.  I’m not an expert on finances, but I do respect Dave Ramsey and what he does.  His plan seems to make a bit more sense than Slugworth Paulson’s does.  That’s an opinion.

“How does this bailout plan affect me?”  That’s the question I’m sure everyone wants to have answered.  According to what I gathered from the interview I just heard (again, I’m not an expert, just a lowly messenger), part of the collateral from the bank bailout is a weakening of the US Dollar.  This means inflation of goods and services, which means that stockholders in goods and services companies will benefit greatly.  Those who do not hold stock will not stand to benefit from it at all, except to know that the market isn’t in turmoil anymore (at least for a while).  In fact, life will get a bit tougher for those who do not have much investment, as the necessities of life will soon cost a bit more than they did before.  In other words, the rich will get somewhat richer, but the poor will get somewhat poorer.  Combine that with the notion that the government would act as a centralized bank that owns a great deal of bad credit (not all, but quite a bit).  Does that sound like good, solid democracy to you?

Compare this with the intended effects of the Ramsey Plan (the common sense fix).  The idea here is that by removing the capital gains tax (only one section of the fix) investors will flood the market with money, hoping to make profits on tax free business transactions.  This will make some people very, very, very wealthy.  This will also create jobs, though, for people who simply need them.  There will be no major inflation, so more income will be generated at a greater value.  The government would take much more of a “hands-off” approach, letting the free market take care of itself, and would actually stand to lose quite a bit of tax revenue from capital gains.  That means smaller government with more money in the pockets of the average American.

Compare and contrast.

In closing, I will say this: it doesn’t look like the common sense fix stands much of a chance at all on capitol hill.  Seems like most representatives and senators are on board with the bailout.  The only thing that could hold it up now is all the pork that comes with the package.  Oink!

“So, why even blog about this if it’s gonna fail anyway, Daniel?  And who are you, to think that you know so much about the economy?  Wasn’t your degree in English?  How old are you?  What’s your IQ?  How many fingers am I holding up?”

All good questions.