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Economic Development is . . . (increasing the flow) of capital through the community and reducing its leakage.

Don’t Be Deceived

Squirrels had overrun three churches in town. After much prayer, the elders of the first church determined that the animals were predestined to be there. Who were they to interfere with God’s will, they reasoned. Soon, the squirrels multiplied.

The elders of the second church, deciding that they could not harm any of God’s creatures, humanely trapped the squirrels and set them free outside of town. Three days later, the squirrels were back with friends.

It was only the third church that succeeded in keeping the pests away. The elders baptized the squirrels and registered them as members of the church. Now they only see them on Christmas and Easter.

Deception has reached every aspect of our lives, we are deceived by people, by companies (through advertising), and even by our own government.

It was Leonardo da Vinci that said, “The greatest deception men suffer is from their own opinions.”

For example let’s look at two terms that are often misused and confused (on purpose – yes to deceive) DEFICIT and DEBT. With respect to government budgeting, they have the following meanings: The deficit is the excess of expenditures over revenues in a single year. The debt is the accumulation of all previous deficits not paid off. In other words, the debt is like all of the water in a bathtub, while a deficit is a flow, like the water currently flowing from the faucet into the bathtub.

This is important because even if deficits are zero (as they’ve allegedly been in recent years for the federal government), the debt is still there. Typically, the federal government runs a yearly deficit in the tens or hundreds of billions of dollars, whereas the national debt is in the trillions of dollars.

The problem with both debts and deficits is that they tend to drive up interest rates (unless of course they too are artificially held down – an item for another article). This is because the government is competing with private borrowers for loans. The result is that government borrowing tends to crowd out private borrowing. Much private borrowing is for the purpose of making capital investments (grow the economy), so the long-run result of crowding out private borrowing has reduced economic growth.

Note to the reader – if you think what you just read about debts and deficits is political in any way shape or form then (reality check) you have been deceived.  Nothing in the proceeding paragraphs was written to favor or dismiss any political opinion; it is simply the factual definition and explanation of the words. It’s time we wake up and stop allowing this deception.

 

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