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5 Things Everyone Gets Wrong About Government Spending

#2. The Government Prints Money Whenever It Wants

Another thing Uncle Thanksgiving might bring up is how the government can print money whenever it wants, and now our money is meaningless, and something something gold standard dammit.

Ryan McVay/Stockbyte/Getty Images
"NO I WILL NOT STOP SHOUTING 'HANDBASKET,' LINDA. YOUR CHILDREN NEED TO HEAR THIS.
ALL CHILDREN NEED TO HEAR THIS."

And that's true; the government (the Federal Reserve, technically) can print money and does all the time. More accurately, they can just declare that some extra money exists now, and they have it and are going to use it to buy things. That sounds grossly unfair to a lot of people, like, for example, everyone who doesn't get to declare they have extra money. And there are historical cases where this has led to runaway inflation.

But, as it stands now, the government doesn't quite print money whenever it wants. Instead, it's set up rules and guidelines which precisely state when it will print money and under what conditions. Normally, it pays attention to the interest rates everyone uses when loaning money to each other and then adds (or removes) money from the system to coax us all to loan money to each other more or less, thus affecting those interest rates. This can have some very useful stabilizing and stimulating effects on an economy. And because the government generally follows those rules, and everyone trusts that they'll follow those rules, we don't end up with runaway inflation, or bread lines, or people fighting in domes.

Ryan McVay/Stockbyte/Getty Images
"Two men enter the handbasket, but only one man leaves."
"Go home, Charlie, you're drunk."

When the government can't print more money, when every bit of currency is theoretically exchangeable for a fixed amount of gold (i.e. the gold standard), the government loses these stabilizing effects. Back when the gold standard was in place, financial panics and depressions were way more common, in part because the government didn't have some of the tools we now have to stabilize things. Imaginary money that we all pretend means something sounds like an insane, nonsensical way to run the world. But it turns out to be one of those things that is really super useful.

daniele morra/iStock/Getty Images
The children were onto something all along.

#1. Everyone Hates Government Spending

Opinion polls on "government spending" routinely show that a majority of American citizens want the government to spend less. The country has a large and growing debt (see that massive, scary spike above), and we can all think of something the government does that is obviously, ludicrously wasteful.

Global_Pics/iStock/Getty Images
$48,000: brushing the Statue of Liberty's teeth (twice daily)

And yet, when surveys try to break this down to find out what specific programs people want the government to spend less money on, something weird happens. Essentially every government program is popular, with a clear majority of people approving of the amount being spent on it, or wanting even more. Medicare? Yeah, we need that. Defense spending? We'll probably need some of that too. Education? Yup.

LuminaStock/iStock/Getty Images
Gotta train those soldiers somehow.

So how can every program (other than a few relatively small-ticket items, like foreign aid) be popular, but everyone agree that the government's wasting untold amounts of money? It's basic math. If everyone approves of 60 percent of the programs the government spends money on, but they all like different programs, this will result in about a 60 percent approval rate for each program. But every individual will see the government spending money on the 40 percent of orphan-feeding programs they don't like and conclude that the government is wasting money. In short, although everyone agrees the government is wasting money, we'll never all agree on where it's being wasted. Which is fine; that's just clumsy ol' democracy in action. But that means that our zero percent approval rate of overall government spending doesn't mean anything. It might even be a sign of everything working perfectly.

Chip Somodevilla/Getty Images News
"So they're guaranteed to hate us no matter what we do?"
"Yes."
"But we can still get $9,250,000 mil-spec jet skis and there's nothing they can do to stop us?"
"Correct."
"I can live with that."
"Vroom vroom."
"VROOOOOOOOOOOOOOOOOOM. Hahahahahhahaha."




Chris Bucholz is a Cracked columnist, not a trained economist, and shouldn't be left in charge of anything more complicated than a shoe. Join him on Facebook or Twitter.

For more from Bucholz, check out 5 Life Hacks That Can Change an Introvert's Life and 6 Negotiating Tactics That Actual Professionals Use.

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