In the midst of the Occupy something or other “movement”, I am stunned at the lack of understanding of the American system exhibited by these folks. Some want all debts forgiven. Others want the banks to be dismantled. Still others want all income to be equal. Another group wants doctors to only make $28,000.00/year. Others think that aliens are controlling all the corporations. Oh my. What have we wrought?
Obviously economics is not these folks' strong suit. For that matter, most of us are lacking in the fundamentals as to how our economic system works. That is why the times we are living in are so hard. People don’t know where to look for solutions, so they look in all the wrong places. Here are two definitions just for the hell of it. Fiscal policy has to do with government spending and taxing policy. Monetary policy has to do with how the Federal Reserve sets interest rates, bank reserve requirements, and the increase and/or decrease of the money supply. That was simple, wasn't it?
Our economy cannot be fixed until the powers that be realize that this time monetary and fiscal policy will not work. Under normal circumstance and normal recessions fiscal and monetary policies work to a degree and can be very helpful. But this isn’t a normal recession. Someone has let the air out of the balloon. Changes in monetary and fiscal policy are simply moving deck chairs on the Titanic. Raise taxes on the rich to “stimulate” the economy under these circumstances is robbing Peter to pay Paul. It is smoke and mirrors with no substance and may actually be harmful as the most productive in our economy are penalized.
Our economy is in systemic trouble. There has to be a change in priorities in order to fix things. Some of these changes will be painful…and others will be exciting and challenging and will represent a rebirth of American greatness. All of them will be controversial because many political policies have become dogma and border on religion. That is dangerous.
Start with fairness. Obama and friends get on television night after night and talk about the rich paying the fair share of taxes. When 50% of working Americans pay no taxes and the top 10% of wage earners pay more than 80% of collected income taxes, Obama is right. Just not in the way he thinks. While the blame game may prove popular to a degree, he is doing a disservice to the country by lying. The tax code needs to be reformed so everybody pays something. I don’t care if it is even a hundred bucks. REVISE THE TAX CODE.
Energy is the lifeblood of America. We are regulating ourselves out of business while our competitors pay lip service at the altar of environmentalism but then do whatever they want. Leading by example doesn’t cut it. We need to normalize energy policy in our country allowing for the production of domestic energy, including coal, natural gas, and off shore oil. I am also for alternative energy development. The government can push the country in that direction with reasonable tax incentives…but it CANNOT continue to regulate our country into oblivion based on some speculative junk science which over and over again is proven to look good in theory, but is not borne out by the empiric evidence. THE CURRENT ENERGY POLICY IS THE DEATH KNELL OF OUR ECONOMY.
As an appendage to our dysfunctional, ideological energy policy, General Electric closed its last light bulb plant in the United States and moved production of the new “green” light bulbs to China. Until the government gets tough with China, requiring it to float its currency like all of the other world players, we will continue to lose business and jobs to the Chinese. Add to that tough, enforceable intellectual property laws, maybe then we can make some headway.
I keep talking and nobody listens. Benanke and crew can continue to quantitatively ease the money supply. Obama and crew can continue to rail against the rich. The “occupy” jack asses can continue to call for dismantling the nuclear power plants. It will make no difference.
1) REFORM THE TAX CODE.
2) ALLOW FOR DOMESTIC ENERGY PRODUCTION
3) NORMALIZE FAIR TRADE WITH CHINA
Do these three things, and we are back in business.
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