A Simple Fix For The US Economy
We have had too many short term fixes from our government. It is time to look long term in respect to interest rates and taxes.
Note, this article is updated, please click here to see How YOU Can Save The Economy!
I can normally come up with a way to fix the world’s problems in about 30-40 seconds. I’m not claiming to have all of the answers, but I have quite a few of them, and they aren’t really that challenging. The big problem with finding the answers to things like health care and the current financial crises we are facing is that most people are too ignorant of the facts to deal with them. Those who aren’t actually ignorant of the facts are too busy trying to get re-elected or line their pockets.
The current economic problem in this country was created by the Fed Rate being dropped to 1%. This led to people borrowing money that they could not afford to pay back. Many of them borrowed that money promising to pay it back at a higher rate upon the adjustment of the Fed Rate. If you sign up for an adjustable rate while the rates are at an all time low, what can you reasonably expect to happen? That rate is now over 4% so guess what has happened to the monthly payments. They have of course increased.
The other issue with the low Fed Rate is the devaluation of the US Dollar. This has caused inflation, despite what Bernanke is saying, inflation is indeed flying. With the USD falling, coupled with higher demand for oil world-wide, oil is bouncing between $80 and $100 a barrel. If the USD were to gain back some of it’s value, oil would fall modestly. This would have a double impact on inflation since lower oil means lower transportation costs for things like food.
Where am I going with this? Well, the current attempts by our wonderful government to bail out the economy stink to high heaven. You don’t fix the problem with over-liquidity by increasing liquidity. This is kind of like tossing dynamite into a forest fire and expecting the fire to die. Lowering the rate is not going to fix anything right now. It may cause short term fixes, but we have a long term problem. The government is also proposing tax rebates and the sort for low income families. Again, this will have short term fixes, but will hurt in the long term. Tax cuts must target the broad economy to have a lasting effect. This is why the tax cuts that we have seen under George W Bush were largely targeted to business owners. Allowing tax cuts gave them the ability to re-invest back into their companies, which helps create new jobs.
So how do we fix it? We start by eliminating all corporate taxes. Now I know full well that this will never happen because democrats in Congress are too busy lying to you to inform you that this would have a massive positive impact on the US economy. So I offer a compromise. Eliminate taxes for all corporations that pay 100% of all health care insurance for their employees. I would bet that the tax savings for a number of companies in this country would allow this. Many already pay a large portion of the insurance for their employees, so they don’t need much more in their pockets to do this. They would also be able to fire their tax attorneys which would help. The savings to the employee replaces the need for more tax rebates. You now give more employers an incentive to make sure their people have insurance, which takes part of the burden off of the government. You also create additional revenue because you give insurance agents more business. And now insurance companies have a reason to try and become even more competitive because they want to attract this additional business. To attract more business, they have to lower their rates. I could think up more advantages to doing this, but this is getting boring and I don’t want this to get too long.
What do we do about the foreclosures? Nothing. That’s right, nothing. We can’t continue to lower rates and we certainly can’t bail people out. If the government bails people out, then we take away from the price of risk. Pricing risk improperly is another reason we are in this mess right now, so I go back to the dynamite in the forest fire example. The reality is that the people losing their houses are not going to be homeless. They simply have to change their style and may have to rent for a while. The other reality is that the banks are now selling these houses off at a loss which simply creates more opportunity for smart people. We have to let this cycle. Anything that resembles a bail out continues to hurt the USD and continues to push up inflation.
I know that you are thinking that I haven’t done anything to actually fix the foreclosure problem, but indeed I have. You see, realizing that a 1% Fed Rate was partly responsible for this mess tells a reasonable person to not do it again. Properly pricing the rate prevents this problem in the future and in fact causes the current issue to stay put instead of expanding. A bail out would extend the problem, again, the inflation thing. Also, the brilliant idea I gave you earlier about corporate taxes puts more money into the pockets of the people trying so hard to pay the mortgage.
Glad I could help.
- January 18th
[...] A Simple Fix For The US Economy [...]
thats a pretty nifty theory.
if you ran for office, i’d vote for you (even though my wife works for a public accounting firm and would be negatively impacted)
[...] Ragan presents A Simple Fix For The US Economy posted at I’m A Pundit Too, saying, “We have had too many short term fixes from our [...]
[...] Ragan presents A Simple Fix For The US Economy posted at I’m A Pundit Too, saying, “I can normally come up with a way to fix the [...]
[...] Ragan presents A Simple Fix For The US Economy posted at I’m A Pundit Too, saying, “I can normally come up with a way to fix the [...]
Option 1: Make Lenders divert some of the interest paid on a home loan into a retirement account…..insured by the Goverment.
option 2: All homes in America are Free! A family/person would have to qualify to live in the home based on their income. This produces immediate free cash flow for the economy. More taxes for cities/gov, more spending cash for economy, more savings, more retirement savings, better healthcare. For the latter two, if person does not contribute…..they are penalized on Aprail 15.
We need to stop basing our economy on the Home!
hec, neither option makes any sense at all. You want lenders to lose more money as one option, and you want no economy at all with the second option.
HOW TO FIX THE UNITED STATES ECONOMY
Ok, I am sick of this shit. Here’s the Top Ten List for how we fix the United States Economy:
(1) Bring back Industry, Manufacturing, Science & Technology, Agricultural, Oil, Automobile, Coal, Rubber, Steel, and all other facets of a “real economy,” ie, where we create a “real product” that can actually be bought and sold, both domestically and overseas, and then divide each each economic facet/sector into at least one for each state, at a minimum (ie, California and New Jersey should be a Science and Technology State, Ohio and Texas should be Agricultural states, etc.);
(2) For each small business generating $100,000 per year, no taxes at all for 4 years, for each business generating $1,000,000 a year, $10,000 taxes each year for 4 years, for each business generating $10,000,000 a year, $100,000 taxes each year for 4 years, etc., you get the idea – this is so people can be hired at salaries instead of paying fucking taxes – in other words, for a little while, the People should pay taxes, not businesses who are providing jobs for Americans;
(3) Stop trying to mimic London with our Economy by becoming a nation that is only about buying and selling fictional “securities,” “promissory notes,” “lines of credit,” “loans,” or any other such nonsensical bullshit, because as we just found out, if people decide to default on their payments en masse, then this entire “paper economy” of promises and illusions, rather than solid work product for solid money, goes completely to shit real fast;
(4) Stop selling our Treasury Bonds to foreign nations and foreign buyers like China and Saudi Arabia – our Treasury Bonds should be for Americans and Americans only;
(5) Pump Iraqi oil into the U.S. Economy and also sell it to the world – we fought for it with no one’s help, even if it was a fucked up war – why should anyone else have it including the Iraqi people, who can administrate it, but we should abrogate it and pump it like blood back into the cold dead lifeless body that is our Economy;
(6) Balance the damned budget;
(7) Do what we have to do to equalize our US Dollar to at least equal to the Euro – the psychological effect of the French people having a higher valued currency is devestating to our Nation’s psyche, and makes EVERYONE want to stay in bed – we are Americans and love to compete, be number 1, and fight – it is part of who we are – we need to get that feeling back that we had in the 1980s under Reagan – Born in the USA motherfuckers;
(8) Stop or reduce Federal Funding for Separatist or Civil Rights Groups which have now outlived their usefulness, and are now making this country dangerously divisive and a nation of whining bitches, eg, Feminist groups (we have made progress, now all they do is neuter real men, decimate families, and destroy male and female commitment), Racial groups (stop enabling minority and hyphenated American racial identity groups, and tell them to shut the fuck up and become an American), and Sexual groups (gay rights, NAMBLA, etc);
(9) Stop fighting foreign wars that we have no interest in – and stop foreign lobbying groups operating in the US from excessively tampering with this basic and fundamental American tenet;
(10) With regards to already and aforementioned Racism, Sexism, Feminism, or any other type of harmful or divisive “Ism,” if you are an extremist of any type, the United States of America doesn’t need your hateful ass – get the fuck out – we all need to live and work together for the rest of eternity – if you are a Hater you need to get the fuck out of the USA and go somewhere else – hatred and negativity based solely on ideological grounds is like a cancer, and decays the body from the inside out, slowly killing its host over years – if you are a cancer you need to be cut out of the body.
Peace Bitches.