‘Cash for Clunkers,’ and a Monetary Policy of Perpetually Increasing Debt

Having made it through the lycanthropes of the House of Representatives on Friday, a $2 billion extension for the Car Allowance Rebate System — that’s CARS, and you’re likely more familiar with the program’s slightly more retarded nickname, ‘Cash for Clunkers’ — will be voted on by the Senate, probably today. Rather, the extension will be passed by the Senate, probably today. (Because, if we can be frank, whatever spending gets voted on by the Senate gets passed by the Senate.)

If you aren’t already familiar with it, CARS is a government program designed to entice drivers to trade in their “clunker” (e.g. vehicle that’s newer than 1983, drivable, and has been insured and registered by the same owner for at least one year) for a newer, more fuel efficient vehicle.

The initial $1 billion allocated to this program is diminishing rapidly, and Barack Obama, our Big Spender-in-Chief, aims to inject an extending $2 billion into it.

“Fuck it.”
– Barack Obama

More bureaucracy, more distorting intervention; here’s why every bit of ‘Cash for Clunkers,’ in-line with seemingly every other of our government’s recent efforts, is entirely lunatic. Dig this…

To start off with, funds being dedicated to CARS are not being pulled from some budgeted pool. There exists no storage hold of government money, which is carefully monitored and rationed. In a simple sentence: This is not money that is already available. The United States Government does not have money that is already available. Period. What goes on is, the Federal Reserve (a NON-governmental, privately owned banking cartel) prints and loans money to our government, at their mutual and corrupt whims. This money isn’t founded on or anchored by anything. At all. It is backed by nothing. It is called fiat money, and it holds value only because our government says it does, and it holds value only to the extent that our government says it does. The Federal Reserve — I cannot stress this enough: a non-governmental banking cartel — prints money, and then loans it to our government at interest, at a rate which is also determined by, of course, the Federal Reserve. And this scheme is not hard to get a handle on: If the Federal Reserve provides the entirety of the United States’ money, and loans it to our government with immediate debt attached to it (e.g. at interest), where could the money to pay back the debt possibly come from? If our government doesn’t acquire new money other than from Federal Reserve loans, from where comes the money to pay back the debt that the Federal Reserve loans carry? It doesn’t come. At best we borrow money from China, which also comes with debt and is of the exact same principle. Our monetary policy is one of perpetually increasing debt. The United States Government sinks deeper into the red every time they borrow money in this way (e.g. every time they acquire new money), and thus, so do we as its citizens, since all governmental monetary burdens are necessarily passed down to its citizens. Next time you learn of some instigating government program like TARP, or some automotive bailout — anything which you think you might benefit from, or can see some good in — before the crotch of your pants is made wet, please recognize that that program implies one (or both) of two things: (A) You are going to be quickly and directly taxed in order to fund the program, or (B) Our government has borrowed the money to fund the program, and thus inherited a new debt which will unavoidably be passed on to you. I’ll reiterate: Anytime our government takes on a new debt, YOU take on a new debt; anytime our government spends money, YOU spend money. Believe me when I say it: the drones on Capitol Hill are not working side jobs at 7-11 to earn money to spend on us.

And surely by now you’re gaining some insight as to why our government does such an awful job spending money (and it does): As was overly aforementioned, it isn’t their money that’s being spent; it is our money, being spent on our behalf. And this further carries with it the implication that our government has no vested interest in what the money is being spent on, since the money is being spent on us and not them. Our government spends our money on us; they have nothing at stake on either end of it. They have nothing on the line.

Again narrowing the focus to the CARS program particularly, here are some reasons why this idea is yet another terrible one:

Probably most obnoxious is, most of the used “clunker” automobiles being traded in for new models are being scrapped. Crushed up, engines disabled, and so forth. These are running vehicles (as I said before, they have to be running in order to qualify for the program in the first place) being deliberately destroyed. The reality of this is that the CARS program is actually harming the people which it allegedly primarily seeks to benefit: poor people. Because, a poor person who might’ve purchased one of these used “clunkers” submitted to a dealership doesn’t get a chance to; the dealers are simply crushing these cars up. Somebody looking to spend within the brackets of a sound budget and get a used car, they don’t have any of these “clunker” cars to pick from. There are other used cares available, certainly, but this nevertheless is a real missed opportunity to expand upon the market realistically available to poor people. John Doe’s used car would’ve been put out on a lot when he traded it in for a new one, and likely later purchased by a poorer person who could still do good with it. Under the pretense of CARS, however, John Doe’s used car is instead being scrapped. Junked. The government is encouraging the destruction of assets with real value, which people can still really benefit from.

Another trouble of this program is that it attracts people to buy new cars — obviously one of the main points of the program to begin with — that they cannot afford. People are trading in fully functioning automobiles, for new automobiles, and new debt. The government is effectively encouraging people to go into debt, and take on car payments that they probably shouldn’t be trying to make. And this manifests as two problems, the first of which being that it hugely contributes to one of the main reasons we’re currently in an economic recession: we have an economy that is founded on consumer credit, and wealth which doesn’t actually exist. Consumers spend, spend, spend money they don’t have on things they don’t need, and are then completely fucked when it comes time to actually pay the bills. Credit card debts, defaulting mortgages, and so forth; you’re already fully aware of any of the things I might mention. Secondly, given their new car payments, consumers now have less money to spend at other businesses. People are acquiring new car payments, and are then necessarily reducing their budgets in other areas: spending less on groceries, less on cosmetics and clothes, less on local services like salons and lawn care. Legitimate businesses are losing and will continue to lose customers and money, because would-be customers suddenly have new car payments to make. All sorts of businesses are losing money, in the interest of propping up unsound automakers that have conveyed an inability to function in the marketplace. Take from the capable and give to the failing, Robin Hood.

Lastly, quite a lot of the people that are utilizing CARS are trading in their automobiles for foreign ones. Another of the stipulations of CARS is that the new car you obtain has to be what the government designates as being “fuel efficient,” and this includes foreign automobiles. Fuck whatever Chevy is boasting about the efficiency of their 2010 lineup; Toyotas and Hondas are absolutely the sorts of cars being most looked at, in perspectives of improving gas mileage. The United States Government is infusing money that is ultimately going to overseas automakers. Awesome. Just awesome.

CARS, Cash for Clunkers; whatever: This program is founded on money that isn’t on hand, and is thus instigating all sorts of debt; it is inciting the destruction of valuable assets; is encouraging consumers who can’t realistically afford new cars to try to anyway; is abandoning funds to foreign markets; is…exactly the variety of effort I’ve come to expect from the maniacs running our show.