Dangers of Government Intervention

The government has intervened in our economy in a more invasive manner than in recorded history and outside the legal realm of the Constitution. The government initially justified the situation through citizens abusing their own financial freedom by living well beyond money made through business or employment. Banks supposedly loaned an excess of funds, although the federal reserve bank establishes the amount of money a bank must lend and also have in savings. The federal reserve could have lowered amount of funds the banks could have loaned and controlled an excess of unpaid debt circulating through the economy. Economically, the federal reserve uses these tactics to take money out of circulation when the economy is inflated. The federal reserve can also increase funds to circulate when the economy is in a depression, similar to the government bailouts. Keynesian theorists arouse after the Great Depression in a an effort to stabilize a crumbling American economy. These tactics were used in a much different method than the government using funds to save businesses and establishing control of businesses. Money used in that time period was mainly to catapult infrastructure and create many jobs where dams, parks and roads were built nationwide. Today, the government has built a disastrous approach to Keynesian economic theory, although government intervention may be necessary in certain aspects to preserve a competitive edge the country may posses, intervention was never meant to control and eliminate the capitalism that defines our nation. The theory was never meant to eliminate freedom in the health care business or undertake the branches of banks where the population of people and businesses lend and save financial power. Controlling of banks are now on federal levels and private investment levels. Banks borrow money from the federal reserve at a discounted interest rate and then financial institutions lend money at a higher interest rate for private and public business needs. In a sense, the government could at all possibility use money at low rates of interest or none and make a profit from businesses or private individuals. This is very dangerous when it is possible for the government to inquire a person or companies use of funds and deny based on prejudice facts. In a normal economy the government should have three sources of revenue: Federal, state and local taxes, government bonds sold to businesses or private individuals, and last manufacturing currency. The government must establish a budget and spending should not exceed tax revenue or debt occurs. New ideas such as, government health care increases spending significantly and thus tax revenue must increase even more significantly. Some people do believe that the government can simply print money if we encounter a lack of funds. Printing money can cause inflation at a increasing rate by having a surplus of supply. For example, if a farmer has a surplus of wheat, then the value decreases and if there is a lack of supply then the value increases. These problems are occurring and are very real because a person's savings could in fact decrease. Problems with having too much currency in the market would mean a majority would have excessive funds and a dollar is not worth as much to businesses, which means prices can increase drastically. Shifts would occur to where a dollar is worth twenty- five cents and if a business or person has hundred thousand dollars in savings, then savings would actually be worth twenty-five thousand dollars. The economy is a very precise balance that most believe is better left to having production and buying of goods, which creates a market. Production is regulated by businesses competing with each other and consumers choosing which business to purchase products or services. If over production ever occurs the input(spending) will simply buy back the output(production). The market in this way stabilizes naturally with the population, which is consumers and businesses. Businesses can be consumers and consumers can be businesses(employment) and businesses providing production will have to provide employment in order to have production. Leaks to this cycle are government intervention and taxes. Taxes do create a leak, but government regulation is needed in some parts of business. Laws and penalties are sufficient in regulating the proper conduction of American business. Government intervention is not necessary and provides a substantial leak to a supply-side economy by increasing tax revenue across the board of the economy to fund unconstitutional regulation. Increasing tax revenue causes companies the inability to pay employees, causing downsizing. Companies move abroad or send manufacturing abroad to avoid high taxes and this creates the loss of American jobs. When the government says they are creating jobs by spending billions of dollars then the government causes new sets of problems by raising unemployment. The country has to be careful, we must never lose our infrastructure and manufacturing because we will have less power and rely heavily on other nations for resources by becoming a service nation.