If this next election will be all about the economy, I thought it was time I read something about it. Economics was not a required class when I went to school (though I hear it is today), so I had a lot of catching up to do. Unfortunately, the subject is so dull that I couldn’t stay awake long enough to learn very much. I did notice that I am not alone, however, it seems the majority of Americans are fairly ignorant of some of the basics too. So much so, in fact that Bush and friends have been able to repeat the mantra of supply-side economics (aka “trickle-down economics”, “reaganomics”, and Voodoo economics) as the answer to all our fiscal woes, and not be laughed off the political stage. When I was younger, I remember the same promises being made by Reagan and his cronies, only to find that it didn’t work! The huge deficits of the Reagan era were then explained as a “tactic” that Reagan used to bankrupt the Ruskies. Oh that wily Gipper!

And guess what? All those giveaways to business under Reagan put us into a recession back then too!

To argue that tax breaks for business will stimulate the economy is a blatant lie. When George W. Bush claimed on January 3, 2007 that “It is also a fact that our tax cuts have fueled robust economic growth and record revenues.” [28] Andrew Samwick, who was Chief Economist on Bush’s Council of Economic Advisers from 2003-2004 responded to the claim:

You are smart people. You know that the tax cuts have not fueled record revenues. You know what it takes to establish causality. You know that the first order effect of cutting taxes is to lower tax revenues. We all agree that the ultimate reduction in tax revenues can be less than this first order effect, because lower tax rates encourage greater economic activity and thus expand the tax base. No thoughtful person believes that this possible offset more than compensated for the first effect for these tax cuts. Not a single one.[29]

I started getting more interested in economics a few months ago after reading some of Ron Paul’s arguments to return to the gold standard. I was totally clueless on this issue as well. I didn’t realize that we have been off the gold standard since 1970 and so is everybody else. Bascially if we need more money, we just print more money! This makes it incredibly easy to keep our country in Hummers and HDTVs (and foreign wars) when we really should be paying off our debts. The trouble with adopting a gold standard today is that we can’t afford to do so! If Ron Paul’s dream of return to the gold standard, of having real gold in Fort Knox again (or at least enough to back all the currency we printed) were actually to come true - we would find ourselves selling off those Hummers and HDTVs to actually pay our debts.

According to our own GAO David Walker [AP story on Washington Post], we’re living so far beyond our means that it will take something just short of a political miracle to right this ship wreck. We’re basically owned by foreign nations, and we have assumed so much debt we’ll probably never be able to pay it all back even at the incredibly cheap rates China is kind enough to offer us, as our huge social programs, aging population, and souring economy converge in a perfect storm for the next twenty years.

So far in my after-hours investigation of economics all I’ve learned is that if I were to handle my personal economy like the Fed runs our nation’s economy, I’d be living under a bridge.