Where Does The Money Go?

Budgets are strange things. They are not always what the figures would indicate. It would seem that especially with government they could get it right. After all, look at what we pay those clowns in Washington to get it figured out right. But there are a number of reasons why it just doesn't work. Figures don't lie, as the adage goes, but liars figure.

Three men go into a motel. The clerk tells them that there is only one room left but they can have it if they want it. There are two twin beds and a hideaway couch that makes up into a third bed. There is also a free continental breakfast in the morning. It is late at night, the only room left in town, so the three decide to take it. How much they ask. Well, the clerk says, we have a special because of the rotten economy so I'll give it to you for $30 for the night. Must have been in Appalachia. The guys agree and ante up ten dollars each.

The next morning they stop by the lobby for breakfast, cold cereal, warm milk, weak coffee, and hard bagels. The day clerk has been looking at their bill and had discovered that the three men were overcharged. The room was really only $25 for the night and he had to return the extra five to get the books to balance. Now there was a problem. The only change he had was ones and fives and he didn't know how to divide the refund evenly. He finally hit on a solution. He told the men that they had been overcharged for the room, was sorry for the mistake, and gave each one of them a dollar back. The three were pleased as the room wasn't all that bad and now it only cost them nine dollars each. The clerk, on the other hand, was happy as he had two dollars left over from the five, which he kept as a tip. Story closed. But was it?

Check out the math. The three men paid nine dollars each for the room. Three times nine is $27. The clerk kept the extra two dollars. Twenty-seven plus two equals 29. Wait a minute. What happened to the extra dollar?

Let's take another example, we'll stay with the hotel business, if you don't mind. A man and his wife from Pittsburgh pulled into a motel in a small western town. The man talks to the desk clerk and finds out that the motel charge is $100 a night. There is only one room left and to hold the room until he and his wife can check it out after they have had lunch, he gives the clerk a hundred dollars, refundable if the room isn't suitable after they look at it. The man returns to the car, gets his wife and they walk down the street to the local diner

Shortly after they left, the laundry man, who takes care of the hotel linens, arrives with a load of clean linen. The driver tells the clerk that the bill for this delivery is $100. The clerk gives the driver the $100 deposit. The driver leaves, and needing gasoline, stops at the gas station on the next block, fills the tank, and pays the bill, which comes to $100, with the money the hotel clerk gave him. The gas station owner breathes a sigh of relief as he owes the uniform supplier for the past week's uniforms, takes the $100 and pays off the uniform man. The uniform man's wife sees the money change hands and reminds him that they still owe the caterer $100 for their daughters wedding reception, grabs the money and dashes across the street and around the corner to the caterer and gives him the cash that pays off the rest of their bill. The caterer, who is getting low on supplies calls in an order to the local market, asks for a rush grocery delivery, which he gets, and pays the delivery man the hundred dollars which brings the caterer's bill up to date. The delivery man takes the money back to the store where the store manager tells him to keep the hundred as it is payday and the delivery boy did rightfully earn it. The delivery boy asks for a couple of minutes off and dashes down the street to the hotel and pays the hundred dollars to the hotel clerk who had loaned him that amount the day before for a room used by the delivery boy's parents. As the delivery boy left the hotel, the Pittsburgh couple returned from lunch and approached the desk. The man explained that they had changed their minds, were not going to stay over night, and requested their deposit back. The clerk agreed and gave them their one hundred dollars back, at which point the couple left never to be seen again.

The merchants of the city were ecstatic at the next business meeting. Would you believe it, said the chairman of the finance committee. We thought times were tough, but our records show a $700 increase in business yesterday alone.

In both of these cases, there is fallacy based on a poor understanding of mathematics, accounting, business, and the true value of money. In the case of the three men at the motel, the mathematics of determining that a dollar had disappeared is obviously false, although when viewed with a bureaucratic eye, seems to make sense. In the second, the hundred dollars brought no increase in the economy, no profit to those involved, and in the last analysis, created a false sense of security and profit where there was none.

Government at all levels, from federal to municipal, has lost the knowledge of what finances are all about. On a daily basis decisions are made by government which are destroying our economic system. There is a lack of understanding by policy makers about how money works, how its value is created, and the danger of false fiscal policies which are running rampant at all levels.

The United States, the financial giant of the world two years ago, is slipping into a third country status because of misjudgements by the Obama administration. We cannot afford out of control spending. In New Philadelphia we can no longer afford the lack of planning on the part of the Administration if we are to survive these critical times. There are no contingency plans for a possible financial collapse. Spending is based on hopes of an improving economy. It isn't happening. This should be no secret given the daily reports of increased bankruptcies, foreclosures, increasing unemployment, the start of real inflation, and the threat of increases in federal income taxes.

The government at at all levels is failing in its financial responsibility. Inactivity on the part of the citizen to hold government responsible is a major cause of this failure. It is your country, your state, your city, and it is being lost because you, as a citizen, are allowing it.

Get involved. Take our country back. Take our city back. We're losing our birthright. Get involved.