Generally speaking, inflation is caused by too many dollars chasing too few things. Example is homes. We're short something like four million single family homes right now, so homes get sold to the highest bidder. If we had a surplus of homes (rust belt Detroit, for instance) homes can be bought for a dollar. Some places in Italy offer homes for a Euro, everyone has left and the towns are dying.
Another example is the price of used cars recently. Not enough new cars (chip shortages, etc.) so money flowed towards used cars, and the prices rose because of the increased demand. This has abated somewhat, but used car prices are still historically high.
The government can be a cause of "too many dollars" by running the printing presses. (You see how well that worked out in Germany in the 1920s.)
OK, so lets see where we can cut government spending. A big chunk of government spending is "entitlements" such as social security and Medicare. Cut social security and see how quickly that government is gone . . . cut Medicare, ditto.
Then we have defense. Do we want a strong defense? Heck yeah we do, nobody will argue that. Problem is all this stuff is expensive, really, really expensive.
Then we have debt service. People buy US debt obligations (treasuries, savings bonds, etc.) because they KNOW they are going to get paid timely. If Uncle stops paying, nobody will buy these any more (yeah, he's a deadbeat, doesn't pay his bills) and that is the END of funding the government.
The above makes up something like three quarters of the entire federal budget. We still need small details like highways, the FAA, and a blizzard of other alphabet agencies, thousands of government employees, government buildings which need to be heated, cooled, maintained and and and and, so guess what, Uncle Sam is living beyond his means, and like many of the rest of us (see the definition of "peons" a page or so back), he's putting it on credit cards.
OK, how can we fix this? Cut spending significantly - where? Raise taxes - cue screaming. Tell China and Russia we'd like to take a year off on military spending - they'd just LOVE that.
What we need to do is grow our economy. We need more businesses to hire more people and increase our tax BASE, not our tax RATE. We need to operate our existing economy more efficiently, and we need to grow it significantly.
Right now, the National Association of Homebuilders says the average price of a home in America is $400,000, and one quarter of that, $100,000 is paperwork, red tape, regulatory compliance and so on. If we could cut that $100K in half, that house suddenly became more affordable.
Here's another example. I needed a topo survey on a project I'm working on. NASA and NOAA have topo surveys of the entire country, free to download (we paid for them in our taxes). Local county has them too, also free downloaded from NASA/NOAA (we paid for them in our taxes, too.)
Local government won't take them without an engineer's seal (P.E.), NASA, NOAA and the county aren't good enough. Engineer downloads them (free), takes his seal, goes crunch, that'll be $1,000 please. City looks at the seal - not at the survey, just at the seal - checks a box, and nobody will EVER see that piece of paper again even when the sun swallows the earth in four billion years or so.
Multiply that by the 4,000,000 new homes we need to build - I ought to become a P.E. and hire people just to crunch topo surveys at a grand a pop.
This isn't (entirely) the fault of the P.E., it is just a dumb, useless no-added-value requirement which is there because "we've always done it that way".
Want to balance the budget? (Or even show a SURPLUS? As the kids say, OMG!) Grow the economy, increase the tax base but not the tax rate, and get rid of a PILE of useless, outmoded rules and regulations that do nobody any good but waste everyone's time and money.
And do have a happy Thanksgiving - be thankful we are not getting all the government we are paying for ;-)
Best Regards,
Mike/Florida
