I’m confused. I’ve been under the impression that things aren’t going well. But, after reading a recent story in the Gazette I’m wondering whether or not I’ve been in hibernation for the past three or four years. The source of my confusion? The article’s title says it all – “Housing market is strong.” I guess that means all the foreclosures I’ve been reading about are either figments of my overactive imagination or dreams.
I haven’t been this confused in years. When I started my graduate work I landed a perfect student friendly job, working in a funeral home. There wasn’t much to it, or at least there shouldn’t have been. On my first night on the job the student I was replacing took me through the paces. It seemed quite unremarkable until he began showing me how to turn the lights out at the end of the business day. He led me down the main hallway. When we got to the first ante-room he told me to pay special attention. “At this point you depress the switch on this wall with your left hand while simultaneously wrapping your right hand around the opposite wall to hit the switch for the room on your right.” I made a mental note and we proceeded down the hall. As we did he explained that it was approximately 25 steps to the next stop. When we stopped he also explained that we would need to reverse what we had done at our first stop. I asked him if I should be writing the instructions down. He ignored me, without even the hint of a smile, and we kept walking and depressing. “Left hand, right hand.… Twenty five steps...Right hand, left hand.” When the training exercise was complete I was utterly dazed. I became convinced I would never be able to turn the lights out and would probably be fired before I could ever learn how.
I think when it comes right down to it our leaders are every bit as confused as I am. Someone has turned off the lights they’re trying to turn them on again. Is it “Right hand, left hand?” Or is it “Left hand, right hand?” The truth is, no one seems to have the answer. The only thing they seem capable of doing is offering rosy scenarios, which is another way of saying, “I have no idea where the light switch is, so I’ll just keep whistling in the dark.”
I don’t think it would be fair to blame our local leaders for all the confusion. The snowball has rolled downhill and it looks like small towns like Emporia might be the final resting place for all the confusion.
Where, and when, did this all start? I dunno.’ I’m having a hard enough time figuring out where we are, let alone trying to get my arms around how this mess began.
I think I do know this. We’ve created a system that invites confusion and precipitates crises. I’m told we have a fractional reserve banking system. We’ve got folks who are responsible for maintaining our monetary base and we’ve got banks that can tap into reserves “created” and in turn lend the money stock out to lenders. Right now, for example, policy seems to dictate low interest rates, which the Federal Reserve has sprinkled their pixie dust on for some time now. That means that banks can go to the discount window and get money for next to nothing and lend it to consumers at a profit. The problem is, the public appetite for borrowed money has all but dried up. What, then, should the banks do with the money? The answer is simple and, I think, more than a bit suspicious. Our government is hungry for money to spend. So, banks, who have gotten the money at the discount window are lending some of it back to the government they got it from in the first place at about 3% interest. That doesn’t seem like much until you realize we’re talking about billions, maybe even trillions. That’s anything but chump change.
There seems to be a perverse kind of logic behind it. Government is creating a product, or the potential of a product. Then they basically give it away. The borrower then becomes the lender and sells the product back to the government for a profit. Such a deal! As Mark Knopfler and Dire Straits once said, “It’s money for nothin’ and your chicks for free.”
But, I remain confused. This looks a bit like money laundering to me. The loyal American in me is telling me that our leaders would never engage in such activity, but my suspicious nature is telling me that when times get tough the prevailing philosophy often becomes, “Any port in a storm.”