Saturday, March 16, 2013

Revolutionary Economics

State and federal budgets are wildly out of whack--we have the kind of budgetary restraints you could expect to find with drunken sailors on shore leave.  Well, actually, no--when sailors run out of money, they generally stop drinking, quit spending, and eventually sober up and go back to work. 

Fortunately, we have no reason to fear.  Both the federal government and the various states have come up with several innovative--if not down right peculiar--ways to increase revenue.

In New York, the state has dramatically increased the tax on yoga studios.  (Really!  If I  came up with shit like that, you would stop reading.)  That should be enough money to make up half the the state's deficit.  And Mayor Bloomingbird has a plan to ban large soft drinks, salt, and headphones for iPods.  While none of this will do a damn thing to end the deficit, it should make the populace so angry they will forget the city's staggering debt. 

If none of this works, the back-up plan is to sell New Amsterdam back to the Dutch.

The deficit in California is staggering under debts that date back to former Governor "Fifty Shades" Gray Davis, who promised to whip the state into shape while actually just screwing the taxpayer.  By now, even the voters of California must realize they chose the least appropriate safe word:  "MORE!"

Now, Governor Brown & the California legislators have a multi-part solution.  First, they outlawed goose liver pate.  While this has not yet provided much financial relief, we all understand that some economic measures take time to be effective.  Second, California has solved the insolvency of the lottery-funded tuition program by diverting half of the proceeds into the purchase of additional California lottery tickets.  While the system is not yet solvent, the dramatically increased sales of the lottery tickets indicates that it is only a matter of time before the system is profitable.

This program is far superior to the New Mexico program.  Under that program, instituted by Governor Martinez, up to 5% of the state government income will be used to purchase lottery tickets from more profitable states.  According to scientists at Enema U, the program should be profitable within 10 years, or well into the term of the next governor.  Longtime resident Shirley MacLaine has been placed in charge of picking the winning lottery numbers.

Both Governor Brown and Governor Martinez have a backup plan:  if all else fails--they plan to annex Texas.

President Obama has identified a heretofore under-taxed pool of great wealth:  Professional Football.  "After we nationalize the two leagues," the president said, "they will be known as the National American Football League and the American National Football League."

"I want to assure Americans that if they already have a favorite team, they can keep it.  But for the millions of Americans who are too poor to have access to a team, or who live in a state that does not pay its fair share by supporting a franchise,  a team will be assigned to them.  Effective immediately, the position of Football Commissioner will be raised to a cabinet-level position."

And, of course, the president has begun a policy called Quantitative Easing to shore up the sale of Treasury Bonds.  The US keeps up the demand for US government-backed securities by purchasing large quantities of the securities with other US government-backed securities.  Currently, we buy $40 billion dollars worth of such funds a month.  (Hell--I didn't make up that nonsense, either!)

Actually, there is a little historical precedent for this last policy.  During the Mexican Revolution, Pancho Villa operated along the US-Mexican border in the Chihuahuan desert.  As the Mexican government fell and every rebel army fought to seize control, the monetary situation of the country became insane.  Villa (and every other general) needed to pay his army and purchase supplies, so eventually every army captured a printing press and issued its own paper money.   Soon there was over a dozen different currencies being issued and begrudgingly accepted by skeptical merchants.  Adding to this chaos were counterfeit bills printed by opportunists with printing presses--with that many currencies floating around, no one could tell which was "real".

Pancho Villa was no exception.  His first attempt at printing currency was rather primitive--it looked like someone had used a rubber stamp on a piece of brown paper that had been used to clean a frying pan.  I imagine that the only way Villa could get anyone to accept that money was to have the army "persuade" them.

Eventually, Villa got the American Banknote Company of New York to print some money for him.  These bills are beautiful, and I have a couple of examples framed in my office.  They are real works of art and look, feel, and even smell like real money. 

When the American Banknote Company delivered a boxcar of the new paper currency--along with a sizable invoice for its work--Villa promptly paid for it with the new money.  Presumably the ever persuasive army was near by.  If you think about it, the company could hardly complain that its own handiwork wasn't real.

Who knew that Pancho Villa, the father of modern economic theory, invented Quantitative Easing?   

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