Monday, January 30, 2006

Dark economic news today

I love economics, I always have. I enjoy listening to The Democrats and Republicans lie about the economy.

According to the Republicans the economy is the best it has ever been. According to the Democrats it is the worst that it has been since the Great Depression. The truth is somewhere in the middle.

The economy is ok. Our economy is consistently growing by about 3.5%. Inflation is increasing by a little under 3% most years and unemployment hovers around 5%

We face two problems that neither Party discusses effectively nor will they fix: Debt and the Federal deficit and Trade and the Trade imbalance.

The Federal debt is over 8 trillion dollars and growing at an alarming pace. The Republicans are increasing every Federal program that exists and they absolutely refuse to kill ineffective programs. Indiana is in debt to the tune of about 1.5 Billion dollars; which is small in comparison to The Federal government. Almost every City, School District, County, and Municipality is in debt as well. The American consumer is heavily in debt. Foreign investors own more of our economy every year.

The frightening statistic put out by The Commerce Department today should be on the headline of EVERY newspaper, should be the main topic on every talk radio show, should be the main topic on television, and should cause concern through-out America.

Unfortunately, no one cares...

Last year, the overall savings rate in the United States was -.5%. The last time we had a negative national savings rate for an entire year was during 1933, during The Great Depression.

A negative national savings rate means that we spent more this year then we had. It means that as a whole the consumers in this country spent more then they made.

The baby boomers are getting ready to retire, the entire social security trust fund has been spent and this system is projecting a massive deficit, and the Medicare program is in even worse shape.

As a nation we buy more then we sell. We are no longer a nation that builds, we are a nation that buys other country's goods. Out high paying, low skill jobs are disappearing. China will become the second Super Power within the next twenty years.

No one cares about this either. Our government does not have a plan to minimize the trade deficit.

Mike Sylvester


Mike Kole said...

As regards savings, I would like to see all taxes and other disincentives from savings and from any other investments removed. It's such foolish policy to punish such positive and necessary behavior.

Saving and investing is one of the things I raise my children to think about and participate in. We have stocks and bonds for 7-month-old Isabel already, and she will learn about them as soon as she is able to count.

Michael said...

Worse than that, Mike. The US is technically in default now where the deficit is concerned. The guys at Hammer of Truth noticed it a few days ago. The government is broke.

Why is it we libertarians can do basic accounting but the feds and the press cannot?

Robert Enders said...

Unfortunatly, the economy often isn't the kind of emotional issue that gets people out to vote. Often, as long as one has all their matierial needs and wants fufilled, they are not going to care. Congress can quietly pass a new tax or regulation that will come to bite everyone in the butt later on.

On the other hand, a lot of young people from well to do families who have not yet had to support a family of their own will advocate government intervention in the economy without having a real grasp of what the consequences of that intervention will be. They have good intentions to be sure. Likewise, I could have good intentions when I attempt to preform heart surgery. In addition to good intentions, I need a comprehesive understanding of how the human body works in order to avoid causing a great deal of damage. I'm afraid that the government knows as much about the economy as I know about the human body.

Barry said...

China the second Super Power? I'm more inclined to think that China will replace America as a superpower. Our manufacturing base has been devastated and there's no sign of that changing. I think America's economy is going to have to hit bottom before things get better. And that bottom will be ugly. Our currency will collapse, and we'll not be able to afford imports anymore. Perhaps then we'll get back to re-building our manufacturing infrastructure? If we're able to do so.

Matthew said...

I think we need to worry about China a lot sooner than 20 years. The money and jobs we are sending over there sends shivers through my spine. And now we come to find out that China is in bed with our enemy Iran, who is in league with North Korea and Hamas and Russia, India, Pakistan, France,... need I go on? This country is in for more than a little financial pinch unless serious changes are made....twenty years ago. Oh well, you have to start somewhere.

Matthew said...

The scary thing about the Chinese is they are in bed with our enemy Iran. And don't make the mistake in thinking that Russia is an ally in any of this. The goal is to dethrone the US from the title of lone superpower. And with a little maneuvering, it can be done, and it will be ugly. Sorry about the doom and gloom, but let's face facts.

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