The latest news and financial insights from your friends at 1st Nor Cal Credit Union.
1st Nor Cal Credit Union - Website
December 2019
Table of Contents
Visit Website
Locations & Hours
Loans & Rates
Online Banking
Mobile Banking
Financials
Member Discounts
Contact Us
Win $50!
There are two member numbers spelled out within the text of this eNewsletter. Find your number and give us a call at
(888) 387-8632 to claim $50!
Follow Us: facebook twitter youtube instagram_new
Return to All Articles
President's Corner
California State Capitol
The Sacramento Bee reported last month the State of California is projecting a surplus of $7 billion in the 2020-21 budget year. Meanwhile, in the morass known as Washington, D.C., the deficit is estimated at $1.1 trillion next year. In addition, California is expected to have a “rainy day” fund balance of over $18 billion, while the federal debt is in the rarefied neighborhood of $22 trillion.

That is a lot of numbers to absorb, so I am going to try to simplify the arithmetic. The term surplus means the amount of revenues that will exceed spending. A deficit is the opposite – spending exceeds revenue. The rainy day fund is the accumulation of surpluses. Your Credit Union has a rainy day fund we refer to as net worth or capital or reserves that we have accumulated for the 70 years of our existence. Our reserves are an accounting entry measuring the strength of our Credit Union. The state’s surplus is cash which is sitting waiting to be used in the event of an economic downturn which is a virtual certainty.

On the other hand, the federal government’s debt is an accumulation of loans called Treasury Bills, Notes, or Bonds made to investors. These loans have terms between a few days and 30 years. The economist John Maynard Keynes argued it was the government’s responsibility to stimulate investment and consumption with deficit spending. When unemployment is high and citizens are out of work, they are not spending or paying as much in taxes, but government spending for items such as entitlements and infrastructure still must go on. However, Keynes hypothesized the debt must be self-funding; in other words, the payback must yield a higher rate of return than the debit used to fund it.

Today, that is not happening. The belief of many elected officials is the tax revenue is there to be spent, and if the spending goes over into a deficit position, the federal government can just print more money. Typically, when economic times are good, budget deficits decrease which lowers the total debt. However, the deficit and debt have more than doubled in 10 years in a time period we should be experiencing a decline.

Some people have told me they are irritated there is so much money sitting idly in Sacramento while the homeless population gets larger and potholes are not being filled. That is understandable, but it was not that long ago that the state did not have enough money to operate during a recession and is unable to use Washington’s money printing press. For that reason, the states’ rainy day funds are more critical than the federal government.

Of course, the simple answer to a deficit is to raise taxes, but who wants that? My college freshman economics professor explained the theory of TANSTAAFL – There ain’t no such thing as a free lunch. Or, as Dr. Fred Brooks, the computer scientist who was instrumental in developing IBM’s most ubiquitous mainframe computer, once said, “You can only get something for nothing if you have previously gotten nothing for something."

To summarize, California’s finances are good; the federal government’s finances are on life support. It can be both a good day and a bad day at the same time. It just depends on which side of the street you stand on.

David M. Green

President/CEO
dgreen@1stnorcalcu.org
(925) 335-3802
BRANCH LOCATIONS
1111 Pine St, Martinez
538 Center Ave, Martinez
4261 Century Blvd, Pittsburg
560 First St, Suite B-106, Benicia
2500 Nevin Ave, Richmond
HOURS OF OPERATION
Mon - Wed: 9:00am - 4:00pm
Thursday: 9:00am - 6:00pm
Friday: 9:00am - 5:00pm

24-HOUR MEMBER SERVICE
(888) 387-8632
Federally insured by the NCUA
Your savings federally insured to at least $250,000 and backed by the full faith and credit of the United States Government. National Credit Union Administrations, a U.S. Government Agency.
We do business in accordance with the Federal Fair Housing Law and the Equal Credit Opportunity Act.
We do business in accordance with the Federal Fair Housing Law and the Equal Credit Opportunity Act.
Recommended Five-Star Institution by Bauer Financial "Because peace of mind matters"
Recommended Five-Star Institution by Bauer Financial "Because peace of mind matters"

www.bauerfinancial.com
The information contained in this email (the “Content”) is provided for informational and educational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose. The Content is not intended to be and does not constitute financial, investment, tax or accounting advice or a solicitation to buy or sell securities. The Content is necessarily general in nature and is not specific to you or anyone else. YOU SHOULD CONSULT YOUR OWN INVESTMENT, TAX OR ACCOUNTING ADVISORS BEFORE IMPLEMENTING ANY ADVICE INCLUDED IN THE CONTENT. By viewing or utilizing the Content, you agree that you will not hold Marquis, Inc., 1st Nor Cal Credit Union or their affiliates or agents responsible for loss or damages resulting from the Content.
Copyright © 2024 1st Nor Cal Credit Union. All Rights Reserved. This email was sent to you by 1st Nor Cal Credit Union located at 1111 Pine St, Martinez, CA 94553.
 
If you no longer wish to receive emails from us please go here.
 
Security Key: A966FB94-C4FD-4D46-B549-86C7B931A406