Economic Recovery Ahead?

Topic: Economic Policy
Economic Recovery Ahead?

What will stop our economy from recovering.

by Steve Hutchinson
Monday, March 15, 2010

What a difference a year makes,or does it? A year ago our financial institutions, government and policy regulators faced one of the gravest situations our country has ever dealt with. And before we knew it, Bear Stearns and Lehman Brothers evaporated in a mist of government intervention in the name of economic stability. The investment banking industry disappeared almost overnight and firms with storied names and reputations such as Merrill Lynch and Wachovia were absorbed into larger entities in a rash of orchestrated consolidations and government policy making.

We saw our financial markets drop precipitously as investors clamored for the safety of cash. Uncertainty and fear reigned. Interest rates dropped overnight as the Federal Reserve intervened into the money supply as never seen before. And this was just during the month of October.

What lies ahead? Can our economy rebuild? Can our government deliver on promises of economic security? Will the small businesses of America restore their self confidence and seize the opportunities created by this chaos to grow and expand their businesses? These are good questions .

I am not certain about economic recovery, but I am certain about four precepts that could potentially delay or place our potential for economic prosperity at risk. They are not political in nature, but grounded in solid economics and study.

1. Increasing government control or regulation.

2. Limiting or restricting free-trade

3. Inflationary money supply

4. Raising personal and business taxes.

Each of these independently can be managed, but the implications of all four of these policies manifesting themselves could have significant implications for the resumption of the long term growth of our economy.

Today the government controls two-thirds of our auto industry. The government’s interests in our banking, insurance and investment businesses concerns many Americans. We have seen the Federal Reserve increase the money supply to historic proportions. The impact of unwinding these activities stokes realistic fears of inflation. Tax policy is at the centerpiece of the government’s economic policy. Their focus seems to be taking a larger share of our incomes and redistributing this revenue through more government programs. Many of the the hindrances to reestablishing our prosperity are already in place.

As quickly as one can possibly imagine we have saddled our children and grandchildren with a debt thay can’t possibly repay. As of this date 100% of all tax revenues are used to pay for entitlement programs. The continuing role of confiscatory taxes will be the norm for the future.

We should watch carefully as policy changes manifest themselves and remember that more often than not, uncertainty for the masses can generate opportunities for some if we maintain perspective in our judgments and keep our focus fearless. We have a great country and a great people. Founded in hard work and the love of freedom. But through this we should seek wisdom.

A person who does not seek wisdom, will soon find himself at a banquet of consequences” Author Unknown

Posted using ShareThis

Post a comment or leave a trackback: Trackback URL.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: