Friday, September 26, 2008

What is the RIGHT Answer to the Economy?

I took yesterday off from blogging to really think about the $700 Billion bail-out, the role of the federal government in our society, and what needs to happen to ensure the economy survives this self-made crisis.

To start, it is necessary to understand the source of this melt-down of the lending firms. The source is not so much "greed" as it is "good intention". The Congress has struggled on economic issues in the past, attempting to do good for the market and main street, however, their constant intervention has led to the mess we are in today. So says the history books: The road to hell is paved with good intentions. That is where we find ourselves today - economic hell... or do we?

I haven't seen any run on the banks (those that are still operating). Folks are continuing to invest in the stock market - making some risky trades in order to capitalize on the shifting market. Ultimately, the market is still working - the economic fundamentals are sound in the United States, and as such, the economy will be sound as well. McCain was right. However, there is a stipulation.

The stipulation comes with the government bail-out. Bush and the Democrats keep coming forward claiming that every minute we wait is another minute that the country's economy continues to fail. Yet the only failure I have seen is nothing more than a correction in the market, and a move on the value of the dollar due to the Federal Reserve cranking out the funny money. (the value of the US dollar is currently 6% of 1913 dollar value - a loss of 94% value) The bail-out, if it is planned to be a $700Billion buy-out - which is code word for nationalization of the Investment, Insurance, and Banking industry - gives monopoly business power to the Federal Government... The US government will become a competing business who also makes the rules for the game... very dangerous.

What is the right answer?

After a long day contemplating the Constitution (yeah - it still exists, barely!), I have determined that the best plan forward would look like this:

If the economy is in trouble, reduce government spending. Pass a line-item-veto, or a "no earmark" law, eliminating pork and allowing the US to use all tax revenue to pay the military, pay the elected officials, and pay off the debt. They should all also agree to a constitutional amendment to balance the US budget each year. No more deficit spending. No more living beyond our means - as a country, or as a citizen!

The government should institute a Flat Tax, or a Fair Tax (consumption tax). This would give initial money back to the people 100% - allowing more money to exist in the free market for investment, consumerism, or savings. This Fair or Flat tax would also include Corporations. Eliminate unnecessary taxes on businesses, offering incentives for business to come back to the United States. In doing so, with a larger tax base, even at a lower tax rate, the income to pay down the debt and run the bare-bones government would increase.

Let the bad businesses fail. The need will still exist for companies to develop and fill the void. Instead of backing a bad investment, let the free market flux weed out poor choices, and encourage innovative Free Market solutions - such as self regulation (or government sponsored, so long as it works) regarding CEO compensation and fraud loopholes that currently exist. If a company makes a bad choice, I should not be forced to bail them out. Let them fail - it re-enforces good business ethics!

Ultimately, if the plan looks like it will be a pay-out, we are stuck with a bigger government, another bureaucracy, less freedom to enter the free market as a start-up (as the Government is now your competition), and a tax burden from which we will never recover!

John McCain and the economic advisers of the far right should do whatever they can to stall the bail-out. The treasury secretary, the President, and the leadership calling for the Nationalization of the economic sector are nailing the coffin of Capitalism in America.

This is a case where we pray that our leadership does what is RIGHT, and not what appears as politically expedient!


  1. Though it might be tough to find a bright side during the economic crisis at hand, this blog post gives some good tips for using this as an opportunity for positive change. Dr. Toni Galardi coined this as a “LifeQuake™” and talks about looking on the bright side – i.e, no money to dine out means more meals spent at home with the family and downsizing to a smaller house means living in closer quarters and getting to know your loved ones better. Check it out for inspiration:

  2. Send the 700 billion to the people 10,000 per tax paying household...then initiate the flat tax. The 700 billion would be repaid in a short time! It would allow for the adjustment of the tax for the average american! Illegals and tourists would pay the same taxes we do generating more money and more people wanting to join America the right way, any surplus of the money could come back to the American people! The time is NOW!! Get a smaller govt and keep the economy afloat..How else would I get this word out, I am just an averag American but it makes too much sense and I can not sit back for this one! Posted By Gilbert DWIGHT COUCH