Join        Login             Stock Quote

Bottom Line: There Is No Such Thing As "Free Money"

 March 01, 2012 02:04 PM

It's about damn time.

Not everyone is addicted to the idea of "free" government money. Believe it or not, there are still some people out there who think there is no such thing as "free" when it comes to government handouts.

At least, that's the message that was sent when City Council members in Troy, MI, voted to reject a federal grant worth millions of dollars.

Read that first bolded sentence.  This is not about what you think.  It is about what is.

There is no such thing as "free money" or "free handouts" by government.

[Related -The S&P 500’s Worrisome Downturn In Drawdown]

Government must do one of two things to obtain money -- it must tax it from someone or it must borrow it.  In the latter case it is actually worse at a larger economic level to taxing it, because the borrowing both comes with interest costs and results in either higher taxes or lower purchasing power, which from the individual's point of view is exactly identical to higher taxes!

Therefore Mayor Daniels is exactly right.  If the people of Troy want a transportation center then they should vote to pay the taxes necessary to build it in the present tense.  This is the lowest-cost form of acquiring the money to do so -- it has no interest expense and it is immediately visable, which means the city will take great care to not waste any of the funds.

[Related -Deflation Warning: The Next Wave]

The Blaze also understates the maintenance and upkeep cost, probably by a factor of ten or more.  $31,000 eh?  Nonsense; that's not even one salary (with expenses.)  Maybe in the first year that might be the capital maintenance spending.  But as we've seen repeatedly everywhere in the country, that's not how it works.  What happens is that sinking funds that should be allocated instead get raided.  That is, funds intended for things like roofs, road and parking lot repairs and similar.  Here in Okaloosa County they did this with funds that should have been put aside for school maintenance and then tried to raise taxes to obtain the funds they knew in advance would be necessary and had blown on other things.

The lunacy of "more leverage" (debt) as an answer to all economic conditions must end.  If there is demand for a given good or service from government then the people will consent to paying the taxes to provide that good or service.  If that is not the case then the demand is not there -- period.

Word is that the government whiners are out trying to have her recalled. The truth is that she's right and if there really is demand for this thing in Troy then the citizens will buck up and pay for it without complaint, as there will be plenty of economic benefit to them that will justify their doing so.

We need hundreds, if not thousands, of Mayor Daniels'. 

iOnTheMarket Premium


Post Comment -- Login is required to post message
Alert for new comments:
Your email:
Your Website:

rss feed

Latest Stories

article imageThe S&P 500’s Worrisome Downturn In Drawdown

Last Friday I reviewed some of the bearish signals that were casting dark shadows across the US stock read on...

article imageADP: Private-Sector Employment Rises A Solid 200k In September

The pace of growth for private-sector employment picked up in September, according to this morning’s ADP read on...

article imageTreasury Market’s Inflation Expectations Tumble

The odds for a Fed rate hike are falling like a stone, or so it appears based on the implied inflation read on...

article imageEmerging Market Stocks: Last Week’s Red-Ink Leader

Value investors on the lookout for bargains have recently been eyeing up the battered corner of emerging read on...

Popular Articles

Daily Sector Scan
Partner Center

Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.