A few posts back I complimented the President on a speech he made in Tuscon, unfortunately I can’t say the same for a speech he made a few days ago to Congress. The national debt has increased to a level that trying to explain it with economics 101 is impossible yet he, and his wing of the party, seems to think that the solution to all problems is to throw money at it. But adding to an already bloated national debt does not make a lot of sense.
We have to back away from the daily policy fights in Congress and think how the economy can grow. One way is to get people to work harder or longer to create “things” and to build a need for more jobs. One of the ways to do that is for the federal government to contribute with policies that reward work and investment by lowering the general and specific taxes we all complain about.
A second step would be to encourage and protect innovation such as new inventions or processes that increase productivity. Seed money from the government would always be welcome, but private investment, luck and human ingenuity are the primary ingredients to innovation. The present fiscal policy of the government inhibits innovation and rewards the status quoi.
There is a third point I wish to make in that our national fiscal policy needs to be changed. We must evaluate all government programs and redirect our monies towards those that produce and innovate rather than divert and consume. I’m starting to believe that the Federal Reserve policy for interest rates and the programs they supported need to be evaluated and restructured. I don’t necessarily agree with those who say the Federal Reserve should be abolished, but I do believe its role in fiscal policy needs to be reevaluated and restricted.
Fiscal policy today says that it is better to use federal money to build condo’s in Las Vegas and housing developments in the suburbs than to redirect the funds towards building infrastructure and plants in areas that can then become more productive, In my mind the answer to this problem is easy, but then again the politicians and money managers who make these types of decisions don’t think as I do.
And that’s a pity, because I believe more people think as I do than do the politicians.
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