We are now well into the new year and even farther into the economic recession, and it would be hard to find people who think that things are looking better. The best you can find are those who will say that things are looking like they may soon start to look better, at least a little bit.
Unemployment continues to grow, with the best predictions calling for a turn around in 2010. The economy continues to shrink. Trade—imports and exports—is contracting. The number of bank failures has been growing in recent weeks. The stock market, after a hope-led surge in the Spring, is languishing. And the great State of California is bankrupt, literally bankrupt. It cannot even borrow money. The state government is making payments with IOUs—as long as people will accept them, and patience is running very thin.
We are now into a full year of trying to run the economy from Washington—stretching back into last year’s failed economic policies under President Bush and continuing at an accelerated pace under President Obama. Things have gotten progressively worse. Maybe it is time to admit that Washington cannot run the economy, at least not if you measure success by economic growth, business expansion, and generation of good (rather than make-work) jobs.
After one year of trying everything, if government-directed, Washington-led economic control worked, you would think that we would see strong evidence by now. The evidence is just the opposite. The job creation engines—business and investment—seem to be on strike. Or maybe they are just frozen out by government programs trying to take their place. With efforts to control all aspects of the economy, from taxes that reach to anything that uses energy, to proposals for government to “compete” with the private sector for health care (you ever try to “compete” with the umpires in baseball?), to plans to have brand new government agencies control the banking system (protecting the “consumer” by making consumers’ banking decisions for them), how can investors figure out where to place their money? How can businessmen make plans for growing their businesses?
The problem is not that the people in Washington are not smart. They are smart. They are just not smart enough. No mortal is. The economy of a great nation like the United States is far too complex for any small group of people to run it. It is impossible for them to know enough or to do enough. These smart people desperately pull on a handful of economic levers and hope to run the entire economic machine, always overlooking myriads of other important economic matters, and mishandling the levers that they can pull.
It is best to let the markets run the economy, the markets that efficiently take the billions of freely-made economic decisions of the whole population every day, drawing upon the combined knowledge of everyone, and turn them into economic growth and expansion. The interference of the government policies got us into the current recession, and the increased interference has intensified it. Now it is time to back off, and let the people make their decisions, all of the people, and watch this economy soar. That formula has always worked.
2 comments:
So, Dad, the question is, what can I do as a citizen to help promote the economy, and stay financially protected, or is it literally out of my hands and I'm too late? I agree with all of this, and it frustrates me that Washington is trying to run something that no small group can. I just don't know where my part comes into play, but I very badly wish I did.
Your question could easily invoke a lengthy and valuable response. I will try to be briefer. I would begin by noting that your frustration stems from how much individual liberty the government has already absorbed. The more that the government does for people and in place of the people, the more powerless people feel (and actually become).
A first step is to let your congressmen and Senators know of your concerns. In many cases, that is not a worthless effort. Many legislators actually keep an eye on the issues raised in their constituent correspondence and count how many are writing on the issues.
A second step would be to express your concerns in a letter to-the-editor of local papers. Even those letters that do not get published get read and inform the editors of the paper.
In both cases, keep your letters short and to the point.
We are also beginning to see the effects of people communicating their views with each other over the Internet through the growing variety of social networking, blogging, and other communications avenues.
With regard to your own financial situation, the answer for now is save as much as you can. When the wave of inflation hits, the value of your savings will be hit, too. One way to prepare for that is that as soon as you have a bit of a nest egg put together, invest in some inflation resistant instruments. For example, there is a Treasury debt security called TIPS, Treasury Inflation Protected Securities. These provide a rather low return when there is little inflation, but in high inflation times they may limit the loss of value due to inflation--at least on paper. They are relatively new and have not been tested by a truly high inflationary condition, but that opportunity may very soon arise.
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