Virtual Voices

Remember 7/13

Economy

Monday, July 13, 2009, was a tough day. It is a day we should remember.

I got home late that evening following a very difficult school board meeting. Our treasurer gave us some unanticipated bad news: Tuition for our classical Christian school is likely to fall far short of the budgeted amount for the upcoming school year. Families are having a difficult time making ends meet. We are not alone. Our head administrator spoke with several other schools that are experiencing the same phenomenon.

Following the school board meeting, I came home and turned on the computer to check the news. The house was dark but the headline lit up my mind: "Budget deficit tops $1 trillion for the first time."

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For the first time in our country's history, the federal budget deficit topped $1 trillion and we could reach $1.84 trillion before the federal government's fiscal year ends in September.

How can our school and the federal government finance the largest deficits in our respective histories? There are three solutions:

  1. Raise revenue (tuition and taxes).
  2. Cut expenses.
  3. Borrow money.

Actually, there is a fourth option available to the federal government: The Federal Reserve can create money out of thin air. In other words, the federal government has a magic bullet that local and state governments and ordinary citizens don't have. It can create money.

If our U.S. representatives, senators, and president didn't have this money machine, we would not have experienced 7/13-the announcement of the $1 trillion deficit. Our elected officials can take the easy way out of their problems. They can turn to the Federal Reserve. Moreover, the Federal Reserve aids in financing stimulus programs and it is the source of cash for the various corporate bailouts.

By repeatedly turning to a compliant and willing Federal Reserve to solve our economic problems, our elected officials are creating much of the magnificent economic disruption we are experiencing today.

What can be done?

First, remember 7/13. We must understand that a $1 trillion-and-swelling deficit poses a great danger to our country.

Second, like the ant, prepare your household in the summer for the difficult times that are likely to be ahead. If you are able, be prepared to help your neighbor as well.

Third, contact your federal elected officials and ask them to get the Federal Reserve under control. I doubt that they have received many calls about our central bank in the past, but it's time they do. I think that most members of Congress don't understand the relationship between central banking and economic disruptions like the dot.com bubble, the housing bubble, and the deep recession we are experiencing today. If they begin to understand the relationship between out-of-control central banking and our nation's economic problems, they will quickly gain an understanding of the linkage between their out-of-control spending, the Federal Reserve's out-of-control actions, and the nation's economic problems.

Our little school is experiencing the brunt of the nation's economic turmoil. We knew tough times were coming but we didn't anticipate the situation would be as difficult as it is. We will get our financial house in order swiftly. We have no choice. Likewise, we need to get our U.S. representatives, senators, president, and Federal Reserve under control.

Remember 7/13.

Lee Wishing
Lee Wishing

Lee is the administrative director of The Center for Vision & Values at Grove City College.

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