Day 199: For How Long Will You Take this Crap? -- Investigate EMC as a Real Solution

The South African minister of finance, Pravin Gordhan, presented the 2013/2014 budget.

The budget is referred to as a 'tight-belt budget' and the minister reminds everyone how badly the economy is performin, how we're all subject to it and that there's just no way around it, but to accept the conditions.

So, when we look at social grants - the following is the best they could do:

"Social grants are going up, but not by much. Old age and disability grants increase in April from R1 200 a month to R1 260, foster care grants will go up from R770 to R800 and child support from R290 to R300."

If you consider how prices will go up, including the tax on petrol, these increases mean absolutely nothing. If anything, those dependent on social grants will be worse off in the coming year.

Now - read the following two blogs:

Day 178: Zuma says to benefactors: "Everything you touch will multiply" - EMC will End Corruption

Day 142: Presidents under Fire

Now you have an idea of how come there isn't enough money for social support. I mean - that's the main purpose of government intervention, isn't it? To correct the unjust conditions created by the free market and to make sure everyone is well off. When it comes to deciding how much of the available government funds should be allocated for that purpose, personal self-interest overrides any compassion.

Self-interest overrides compassion every day in every country - more and more you will hear the same song, the same message: government doesn't have enough funds - sorry guys, nothing to be done! And as the population endures more and more suffering, the ideal justification is created to sell of national assets and enter the age of Privatisation - ask Greece and Spain how well it is working for them. It is spreading in Europe and the plot thickens in South Africa.

Start investigating Equal Money Capitalism as a viable and real solutions to the scams we have to put up with every day. If we leave it up to 'the big guys', nothing will happen. So, join the forum at www.equalmoney.org/forum and find out what you can do to support.

Source: http://www.google.co.za/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CDIQFjAA&url=http%3A%2F%2Fwww.pressdisplay.com%2Fpressdisplay%2Fviewer.aspx%3Fissue%3D69122013022800000000001001%26page%3D1%26article%3Daa1b0d6f-cdd9-45ad-8568-bac891c85aff%26key%3DlrJ%2B8W1WJhorvjCLd6Ncdw%3D%3D%26feed%3Drss&ei=ZLgzUaq-Eamw0QXN04GwBA&usg=AFQjCNH0_5deeqlbdp6jgqm1uMtsf3DR2w&sig2=MhzS_fms3IjmTmjNkI8Isg&bvm=bv.43148975,d.d2k&cad=rja

Related articles

• Day 178: Zuma says to benefactors: "Everything you touch will multiply" - EMC will End Corruption
• Day 176: Will the Elite Manipulate the Public to Push for Privatization in EMC?
• Day 186: The Invisible Hand is Invisible because it Doesn't Exist - Equal Money Capitalism and Providing Results that are Best for All
• Day 189: Will your Level of Education Determine your Income in EMC?
• Day 170: Companies and Industries in EMC
• Day 167: Harmony and Equilibrium within Equal Money Capitalism
• Day 188: Simple Solutions in Equal Money Capitalism
• Day 172: Retirement and Holidays within Equal Money Capitalism
• Day 190: Fairness in the Work Place and Equal Money Capitalism
• Day 171: Life-Force and Expression in Equal Money Capitalism

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Day 84: Fiscal Policy and the Budget

So - what tools does the government have available to intervene in the economy?

These tools are:
- Government spending
- Taxation
- Borrowing

Every government specifies how they will make use of these tools in the budget. So - the budget will reflect a government's policy in terms of what types of results they wish to achieve and how they will practically do that. The main points that are given attention within the budget are government spending and taxation. For instance, the government will specify how much funds will be available for education, for healthcare, for military training, etc. - as well as what types of products will be taxed, by how much and how incomes will be taxed. Looking at a government's budget will give you an idea of what the government deems to be important and what not. The budget is in essence a plan in terms of how the government wishes to regulate the demand and supply for goods and services in the economy.

We have already discussed monetary policy extensively in previous blog-posts. The budget and all the tools a government has available are referred to as 'fiscal policy' ('fiscal' comes from the word 'fiscus', which is what the public treasury was called in ancient Rome). Monetary policy - as carried out by the central bank - and fiscal policy are attempted to be carried out in harmony to prevent the one policy from counteracting the other one.

In this blog-post we'll introduce you to the 'general idea' of how governments utilise the tools of government spending, taxation and borrowing - after which we'll discuss each point individually.

What will a government generally do when the economy is in a recession?

Firstly - what is a 'recession'? Recession is when the economy is doing 'bad'. Compare the economy to the human body - where exchanges take place, blood flows, organs interact with each other and each cell has certain requirements in terms of the sustenance that it requires in order to function properly. A recession is when the economy is 'ill' - where fluids don't move through the body effectively and resources/sustenance are not reaching the participating cells in an effective way. Signs of a recession are a fall in income, total production, investment spending, business profits and inflation - and a rise in unemployment and bankruptcy.

So - with the understanding of the word 'recession', we ask the same question again: What will a government generally do when the economy is in a recession?

When in a recession, the government will pursue 'expansionary' fiscal policies so as to stimulate economic activity. 'Expansionary fiscal policy' can be translated into: an increase in government spending and a reduction in taxes. Increasing government spending and reducing taxes are both policies to increase the money supply - eg: increase the amount of money in circulation in the economy.

When applying expansionary fiscal policy, a budget deficit is usually created - because governments increase what they spend, and decrease what they earn. The difference between what is spent and what is earned (the difference between what goes out in the form of government spending and what comes in in the form of taxes) is called the 'budget deficit'.

The opposite can also occur - when an economy, instead of being in a recession, is expanding too quickly. In those cases, all prices will rise (inflation) and industries in other countries will become more competitive in comparision, leading to balance of payment problems (where more money leaves the country than comes into the country). In such a situation, the government will attempt to pursue 'restrictive' or 'contractionary' fiscal policy. This can be translated into: a reduction in government spending and a raise in taxes. The idea here is to withdraw money out of circulation.

This all sounds really neat and simple - but in practicality, it's not that clear-cut. The problem is that there is usually quite a big delay between what happens in the economy (for instance a recession) and the response of the government (for isntance expansionary policy). Sometimes - by the time the government is aware of the recession and starts implementing expansionary policies, the economy may have already started expanding by itself and the governments' measures are pointless, or even make matters worse.

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