Category Archives: Economics

Remember When You Had Never Heard of a Fiscal Cliff?

To thank you all, who have stuck with me through this, my 150th post, I thought I would tackle a serious topic for a change.  -MK

It was cold in Washington, D.C.  Cars took longer to warm up in the morning and made people late to work.  Heavy coats on backs of chairs at restaurants made it hard to squeeze by.  The cold air made people’s hands very dry.  But for the government, it was business as usual.coupons

“Sir, what are we going to do about the fiscal cliff?” the intern asked the Director.

“Hold on a minute.  I’m moisturizing.  This cold air turns my hands into parchment.”  The Director squeezed some hand moisturizer on the knuckles of either hand, and then rubbed his knuckles together, with the palms of hands facing out.

“This way,” the Director said, “I don’t get that greasy moisturizer on any official documents.  It’s a good thing the Declaration of Independence was signed in July, otherwise there would have been greasy moisturizer stains on it.  Imagine what that would have done to liberty.  Now, what were we talking about?”

“The fiscal cliff, sir.”

“Ah, yes.  I heard something about that while I was in line at Krispy Kreme.  What is it again?  Some kind of landmark?”

“The fiscal cliff is the colloquial term for the set of austerity measures that automatically go into place at the end of the year as part of the debt ceiling compromise of August, 2011, sir.”

“What you just said is all Greek to me.”

“Sir, unless we do something about the federal budget, government programs will be cut and taxes raised, automatically on January 1, without any votes or debate.”

“Oh, so this cliff isn’t a real place?  Like, I can’t get a bumper sticker that says ‘This car drove off the Fiscal Cliff’?”

“No, I don’t believe so, sir.”

“Bummer.  All right, let’s see.  Where can we find money?”  The Director leaned back in his chair and looked up at the ceiling and drummed his fingers on the sides of his neck.  “Money…money…money.  We…need…money.”  He closed his eyes as if he was making a wish before blowing out birthday candles.  Suddenly he opened his eyes and sat up.

“I’ve got it!” he said, and told the intern of his plan.

It took a little while for people to get used to the idea of the government engaging in extreme couponing.  An entire new bureau had to be built and staffed with the most extreme couponers in the country, who had to be lured away from their home communities with laundry detergent and frozen steakums.  Conservatives complained that the framers of the Constitution had never intended the federal government to save money.  Liberals complained that the program was going to take coupons away from teachers and firefighters.

But when the Bureau of Extreme Couponing purchased a fleet of stealth bombers and new toilet seats for every restroom in the Capitol for only $1.37, the people embraced the program with open arms.  Health care costs plummeted from 17% of GDP to less than the price of a Netflix subscription.  Just by checking the Presidential Sofa for loose change, the federal government was able to restart the shuttle program, and procure canned peaches through 2043.

They started televising the purchases at the checkout line.  Millions of viewers would sit on the edge of their seats, holding hands, watching the digits on the price display.  In one episode, the employee at the register called out the names of each public good right before scanning it.

“Highway programs…[beep]…National Park Service…[beep]…Coast Guard—”

“Wait, I have a coupon for that,” the Federal Couponer said.  Dramatic music played while the Couponer rifled through a stack of coupons in a little zippered purse.  The employee looked bored and the shoppers behind looked around for a line that was moving faster.

When the coupon was located, a fanfare was played and the price on the display went from $487 million to zero.  And as if it could not get any better, United States Postal Service pensions were buy-one-get-one that week.

“Sir, the Extreme Couponing program is a success!” the intern said.  “This year we’re going to post a budget surplus along with 17 million tons of spaghetti sauce.”

“Excellent,” the Director said.  “But you look troubled.”

“Well, sir, I just don’t understand how it works.  The money that we’re saving, that’s great, really great.  But, I mean, where are these coupons coming from?”

The Director wrinkled his brow, and stared out the window, and rested his chin on his hand, and considered the question that was his awesome responsibility to answer for the good of the nation.  Suddenly his eyes gleamed and he snapped back to face the intern.

“Manifest destiny,” the Director said, and then picked up the phone to order a pasta lunch for the third time that week.

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Remember When Interest Rates Were Positive?

“There’s got to be something we can do to get this economy rolling.”

“There isn’t, sir.  We’ve taken interest rates as low as they can go.”

“Don’t use ‘they’ to refer to interest rates.  ‘They’ should be used only in reference to people.  Use ‘these’ or ‘those’ or something.  Rework the sentence.”

“Yes, sir.  We’ve taken interest rates as low as these…um, those…the interest rates can go.”

“That can’t be true.  How low are the rates now?”

“Zero percent.”

“Zero!  So isn’t that igniting economic growth?”

“It is reported that more and more people are choosing to move in with their parents rather than start Fortune 500 companies.”

“But it’s cheap to get a loan!  Zero percent!  Why aren’t people going into more debt?”

“I don’t know, sir.  A lack of parking near the bank may be a problem.”

“Well, if zero percent won’t do, we’ll have to go below zero.”

“Below zero, sir?  You don’t mean—”

“Oh yes, I most certainly do.  Negative interest rates.”

“Negative interest rates?  But that would mean that people would have to pay for the right to deposit their money.  And people who borrowed money would be paid for the right to borrow it.”

“Exactly.  Now let’s see them try to not go into debt and spend.”

The newspapers dubbed it “Monetary Fallacy,” but after a few months it was hard to argue with the results.  Saving was at all time low, and spending at an all time high——and that was saying a lot.  Sales of flat-screen televisions over 60 inches quadrupled.  The number of new employees that were needed to carry those televisions from the register to the customers’ cars reduced the national unemployment rate by three whole percentage points.

And technology was not the only sector that was booming.  People took out loans to make additions on their houses.  Even people who already had very nice houses were finding deficiencies that they had not noticed before.  Suddenly everyone had to have a charging room, filled with outlets so that people could charge their phones and laptops and eyebrow trimmers.

“Oh, you don’t have a charging room?” went a popular conversation.  “Well then, looks like we’re hosting Thanksgiving this year.”

Because borrowers were paid to borrow money, some people quit their jobs so that they could borrow full time.  And thus even more positions were freed up.  Young people who had taken out thousands in educational loans to earn post-graduate degrees in esoteric areas like Tupperware Organizing could finally pursue their chosen field.

“Sir, you won’t believe it!  The unemployment is the lowest it has ever been!”

“Excellent.  And they told me I couldn’t do long division.  Tell me, what is it now?”

“Zero percent.”

“Zero?”

“Why yes.  Why are you making that face, sir?  Isn’t zero percent what you wanted?”

“Of course not!  If unemployment is zero percent, then what do they need policy wonks like us for?  How will I pay for my new charging room?”

“But sir, we can’t let the unemployment rate go up in an election year.”

“Well then, if we can’t let the unemployment rate go up, we’ll have to take it even lower.”

“Sir, you don’t mean—”

“Oh yes, I most certainly do.  Negative unemployment.”

“Negative unemployment?  But sir, how does that work?”

“Haven’t I taught you anything?”

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Remember When You Had Never Heard of Austerity Measures?

Last Sunday night, or Monday morning if you use the metric system, it was announced that François Hollande had defeated Nicolas Sarkozy in the runoff election for President of France.  The voters, by a crushing 51.62 majority, rejected the austerity measures being pushed by Mr. Sarkozy, and embraced the 15-minute work week being promised by Mr. Hollande.

I used to hear the word “austere” used only in connection with the 17th Century Puritans, who observed strict fiscal discipline by tightening the buckles on their shoes and hats.  But after “austerity” was anointed the Merriam-Webster Word of the Year for 2010, I started paying attention to this newer usage, and what it meant for my Pez habit.

The term “austerity” when used in connection with economics means, in a very general, non-nation-specific, Wikipedia kind of way, “a policy of deficit-cutting, lower spending, and a reduction in the amount of benefits and public services provided.”  The more I’ve heard this word on the radio as I search for the latest Katy Perry hit, I’ve started to introduce some austerity measures into my own life as a way of reducing my debt obligations to foreign markets.

The first area in which I tried to impose some fiscal conservatism was in garbage collection.  In my home, we typically throw garbage out.  But this requires paying for someone to come and pick our garbage every week.  So to save on this bloated budget item, instead of throwing out our trash, I started taking it to work and using it as weight to keep books open flat on my desk.  On occasion the weight still contains some food, yielding double austerity points for saving me from having to buy lunch that day.

Another area that was really adding to our households expenses was eating out at restaurants.  So to save money I decided to start cooking.  But first I had to learn how.

“Honey,” I asked my wife, “where do we keep all the ingredients and recipes?”

After an hour of searching through the kitchen, and getting bogged down in the drawer that holds all the pens, tape measures, and keys that don’t go to any locks, I was ready to make chateaubriand, a dish that has fallen out of favor in America but which I’ve always liked pronouncing.

Searing the meat was easy enough; in my youth I was a Boy Scout for several weeks and so was familiar with fire.  But I really got hung up on the shallot.  Like, what was a shallot?  I searched on the Internet, and found that a shallot is “a botanical variety of the species Allium cepa.”  Still puzzled, I looked at a picture of shallots.  “Ah, they look like onions!” I said, and located an onion that had been rolling around in the vegetable drawer of our refrigerator, a drawer I hadn’t opened since the Prussians sealed off the city and attempted to starve us.  After serving the chateaubriand, however, I think my wife would have preferred starving.

My last austerity measure was designed to save money on gasoline.  I started hitchhiking to work once a week.  The thumbing-signal I mastered pretty quickly, but I could never get the red polka dot cloth tied properly to the end of the stick.  There was a seminar being offered at the local community college on “Introduction to Running Away From Home,” but, thanks to the austerity measures, my education budget had been slashed, and I had to hold my polka dot cloth with my lunch and work in my hand.

No one wants to pick up a hitchhiker who can’t master the polka dot cloth on the end of a stick.  I learned this the hard way.  But maybe that’s what austerity measures are all about—learning how to learn for free.

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