Posts
Hardly a day goes by without more reports of government funds being thrown into the financial market. Although we are encouraged to trust the administration and this new stimulus plan, any thinking person can do the calculations, and see that it just doesn’t add up. When you’re dealing with huge concepts like billions of dollars, it is dangerously commonplace to hear that the new proposed Federal bailout package is over $1 trillion now. As our national deficit soars past $10 trillion, all of this additional spending to our budget will cause even great problems down the road. But all we see are politicians and lawmakers running around trying to save the day with more money, and paying no heed to the impending night. Basic economics, history, and reason all prove that when the government tampers with the economy, the results are negative.
It looks like all of us in Chemung County might finally get a look at some of that Federal money, after all. Last month the Elmira Savings Bank received a check from the government totaling $9.09 million in stimulus dollars. Assistant Vice President Kim Elliot says this will enable them to generate more loans, and to promote growth in the community. Michael Hosey, the president and chef executor of the bank assures that Elmira Savings is “still strong and growing.” The danger now is that as more money is pumped into the system, our savings will lose value as the rest of the market experiences inflation.
The banking system, and in some ways the entire economic system relies on a trust. When you trade currency for goods or services, that dollar bill is a promise of a set value. Inflation breaks that trust. In the same way, the banks use the funds you deposit to finance other people homes, help them buy a new car, and essentially flows through the market in a stable pattern that ensures your money will be there when you withdraw it. Irresponsibility and poor money management breaks that trust. This entire economic crisis started when the banks were making out large loans to people to buy houses, and was exacerbated by inflated collateral prices, all of which resulted in net losses to both the financial and banking industries.
Tom Woods, the manager of the Solutions Federal Credit Union says that this problem began back in the late 1990s, when banks lowered their standards of loaning money, and tried to create equality while ignoring the debt-to-income ratios that were used for decades. “It’s not popular, but not all borrowers are created equal” said Mr. Woods. “Philosophy went if everyone has car and house, you have equality, and happiness, and prosperity. And like many things that look good, the end result can be pain sorrow and misery. If you don’t have the management skills and resources to pay that back, you lose your car or your house.” What happened was that thousands of people would finance their house with a $100,000 loan, and that would inflate the market. Their new home would be appraised at $130,000, with the value of homes was being artificially raised due to and increase in housing loans. When it all finally came back down, the people who had taken out these huge loans were left with big mortgages that were greater than the value of their homes. Then when they foreclosed, the house could be sold for $80,000, and the bank had to absorb a net loss $50 grand.
Tom Woods says the only solution is for people to start living within their means. If the government keeps on bailing us out, we’re headed for another economic emergency, just like the banking and housing crash. Government bailouts are just like the lowering of lending standards. It takes way the responsibility of individuals to pay for their actions. Just like the banks could only absorb so much of other people’s losses, we’re approaching the point as a nation where we can’t take anymore debt. The scary thing is who will really have pay. “I think we’ve forgotten who we work for, and who we’re accountable to” said Mr. Woods. “Really, all that money is the American people’s money. Government doesn’t have money just lying around. It’s like a credit union. If you borrow money and don’t pay it back, it harms all the other credit users.” Those extra trillion dollars the government just borrowed will have to be paid back by the taxpayers. According to the research of a public policy research institute called the Heritage Foundation, Congress’s budget resolutions will require a 3.3 trillion dollar tax increase over the next decade, roughly equaling about an additional $2,600 per household annually. And hold your breath, because we’re still spending,
So what should our perspective as Christians be? Thou shalt not steal for starters, and there are plenty of ways to do that in this world without breaking the law. Try to exercise safe financial practices, and above all trust in God. It’s ironic that at a time when all our economic trusts are failing, our money still says “In God we trust.” I was watching the congressional hearings last week, and one Congressman stated, “It will take someone with the Wisdom of Solomon to sort this all out.” Unfortunately for our politicians, Solomon’s wisdom was a gift from God, and they don’t seem to get along with Him very well. A separation of church and state is a separation of wisdom and reason, as well. If you want to succeed in anything, you need faith in something higher. Tom Woods, the manager of the Solution Federal Credit Union says his faith has been indispensable. “As I see things crumble in many people way of looking at things, I’ve been able to know what’s going on… I am not overly paralyzed by the thought of where we’re headed. God is good, and if I stay the course and stay true to God he will make good things happen. Whether we do good or not, I know God is in control, and for his people He will not leave us or forsake us.”
Labels: Economics, MorningStar News, Politics
Subscribe to:
Posts (Atom)