How Money Is Spent

I have written about this quite a bit, but I figured given the current debate about spending and the debt, it was a good time to revisit a fundamental economic truth that most people will never consider or understand. 

In the words of P.J. O’Rourke, “One of the greatest ironies of economics is that giving people money doesn’t make them richer.”  What he means by that is that wealth without value to its possessor is not wealth at all, but simply money.  If you don’t have a production stake in how that wealth was created, you will not use it to create wealth and benefit society.

Milton Friedman explained this concept brilliantly as The Four Ways Money is Spent.  Said Friedman, we always spends money in one of four ways.   

• We spend our own money on ourselves in which case we seek value (as the producer) and quality (as the consumer). 
• We spend our own money on others in which case we seek value, but care less about quality. 
• We spend other peoples’ money on ourselves in which case we seek quality, but have no vested interest in value. 
• Finally, we can spend other peoples’ money on other people.  In this case, we have no interest in quality or value. 

Government always and necessarily spends money in the fourth way.

Global Free Markets vs. China

Yesterday, Google decided to shut down its Chinese search page after a frustrating Chinese government continued to censor Google search results and hack into Google servers.

In response to China’s authoritarian approach to social control, Google redirected its Chinese site to the unregulated Honk Kong page. But a belligerent Chinese government “moved on Tuesday to block access to the Hong Kong site, the use of which Google had hoped would allow it to keep its pledge to end censorship while retaining a share of China’s fast-growing internet search market.” Understanding that the Chinese government enjoys operating via thought police, it will be interesting to see what China will look like in the next half century. 

The real question becomes whether or not democracy is inherent to every culture and whether democratic values such as free speech and basic natural rights are fundamental to every human society. I would argue that democracy is not inherent to a culture, but humanity’s desire to be free most certainly is.

After Google announced that it would be shutting down its Chinese search page, people in Beijing brought flowers and chocolates and placed them at Google’s front gates as a virtual sign of mourning.

"International Bankers Run the World," says 'Rich Dad'

If you love somebody, buy them this book. It might save their life. 

Watch, Kiyosaki laugh at the 2:17 mark. It's all so obvious to those who pay attention.

Quotes About The Federal Reserve And Central Banking

"Most Americans have no real understanding of the operation of the international money lenders. The accounts of the Federal Reserve System have never been audited. It operates outside the control of Congress and manipulates the credit of the United States."
-Sen. Barry Goldwater

It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning."
-Henry Ford

"The regional Federal Reserve banks are not government agencies. ...but are independent, privately owned and locally controlled corporations."
-Lewis vs. United States, 680 F. 2d 1239 9th Circuit 1982

"The Federal Reserve banks are one of the most corrupt institutions the world has ever seen. There is not a man within the sound of my voice who does not know that this nation is run by the International bankers."
-Congressman Louis T. McFadden

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