If I Have to Explain Sequestration to One More Person…
September 29, 2012
If there is one thing I have learned from the past couple of years, it’s that I know basically nothing about how the economy actually works. I have a firm grasp of federal budgetary procedures and thanks to a great grad school course on how to report on the economy, a fairly good understanding of the Federal Reserve, the stock market, futures, options, and all of that stuff.
But as to how the economy actually works, what forces actually affect the rise and fall of the average person’s fortunes, I have to admit that I’m still a little in the dark. And that’s how it should be… right? If the economy is chugging right along, if everything is going as it is supposed to be going, if there aren’t any wayward bankers and investment advisers altering the flow of things, I shouldn’t need to know what things are.
Then came 2011 and 2012. Congress decided they were going to fight over every. little. thing. and that we might default on our debts. The only way to get anyone to agree to anything at all was to implement what is known as sequestration. In other words, the 435 men and women in the congress and the president couldn’t agree on budget cuts now, so they agreed to massive, economy-altering, but hypothetical, budget cuts about a year in the future.
Fast forward a year and, guess what? They still can’t agree and now those hypothetical budget cuts aren’t seeming so hypothetical anymore. If the lame-duck session after the election can’t come up with some agreements on budget cuts and deficit reduction, those hypothetical budget cuts will become oh, so real.
In a recent episode of “The Bugle,” a satirical news podcast by The Daily Show’s John Oliver and his cricket-obsessed, London-based friend Andy Zaltzman, John Oliver went on a rant about having to explain LIBOR (the London InterBank Overnight Rate, or the interest rate banks pay to other banks to borrow money from them). “I don’t want to know what that is!” he yelled. And if it weren’t for the actions of some banks to allegedly affect the rate to make their businesses look more attractive, he wouldn’t need to.
But maybe this is all for the best. After all, now that I know all this stuff, maybe I could have a promising career explaining it all to my fellow Americans, most of whom remain blissfully unaware that these things exist, and how they are subtly changing the future of the world’s economy.