Economic Recovery

When will the economy recover?

If someone knew exactly when it would, they would certainly profit handsomely. Because we live in a imperfect world, rationality and irrationality makes it nearly impossible to accurately forecast what tomorrow will bring. We certainly are living in some very interesting times. High unemployment, exponential debt, and a deteriorated financial industry are just some examples of what we are experiencing. Our economy is a subject that is being debated daily. Is the recession nearing an end? Is the recession just beginning? Many support both sides. I happen to be in the camp that believes we are far away from climbing back from this recession. When will the economy recover? I have no idea but I can tell you that until the government stops intervening in this crisis the finish line will continue to be out of sight. How can we even discuss any type of recovery until we let all the malinvestment liquidate from a decade of easy money policies? We cannot look to the government for economic recovery when they were the ones that got us into this crisis. How can someone that got us into this crisis have any idea of how to get us out of this crisis? They don't even understand how we got into this crisis and we want to rely on them to figure out how to get out of this mess. Sounds like insanity to me. Economic recovery will arise from We the people. It will come from entrepreneurs who will create new industries and job growth. It will come from a limited government and abolishment of the Federal Reserve. It will come from honest money not fiat money. It will come from lower taxes and savings. Buckle up. This is going to be a bumpy ride.

Its AIG's Fault!

Americans have been outraged at the issuance of 160 million dollars in bonuses to AIG executives. It is sad that the American people are spending so much time,energy, and emotion on the 160 million dollars that tax payer money financed. I guess the fact that our government bailed out this institution with 160 billion dollars and no strings attached doesn't deserve the same time,energy, and emotion. Not that I agree with the irresponsible and unsound decision of AIG to issue these bonuses, but these bonuses were in a contract and the money had no strings attached. What is even more sad is the fact that Congress even had the dignity to issue an unconstitutional tax on the holders of these bonuses. What does this say about equality and trust in America? Where does it say in the Constitution that Congress can disregard contracts and issue specialized taxes whenever they want and on whoever they choose? The government claims that AIG employees don't deserve any bonus at all because they didn't do their job. Well for one that is a very broad statement. How do they know that each AIG employee that received a bonus didn't do their job? Secondly, if you feel that they should be taxed 90% on these bonuses because they didn't do their job, well than I suggest that each Congressman should take a pay cut as well. Bottom line is that all of this could have been avoided if we just let the market handle the situation. If we didn't bail out this institution with over 100 billion dollars of tax payer money, there would be no arguement on any of these issues because AIG would go bankrupt and they would get what they deserve. Imagine the money,time,energy, and emotion saved if we let the free market regulate. If you want to be outraged at anyone, you should be outraged at our government. It was our government and the Federal Reserve who created this entire mess and now we want to blame it on everyone else but them.

Government is the Problem, Not the Solution

Why don't we ever learn from history? It is clear that Obama has dreams of becoming the next FDR by issuing a similar stimulus package as the New Deal but on a bigger scale. What critics seem to not understand is the New Deal had no positive impact on the Great Depression. It had no impact on unemployment what so ever. As a matter of fact, the New Deal prolonged the Great Depression and added unnecessary debt on the backs of taxpayers. One could assume that the US would have never experienced a depression if we let the market cleanse the bad debt after the stock bubble burst in 1929. It was the Fed that created the bubble and it was the government that believed they could avoid the consequences of this policy by more intervention. I find it ridiculous that the Federal Reserve was created on the belief that they would prevent severe economic contractions. Sixteen years later, our country experienced a depression. Letting the market handle the situation would have ensured a recession instead of a depression. When are we going to learn that government is the problem, not the solution? I guess its going to take trillions of dollars of debt, a devalued currency, loss of liberties, bigger government, and high unemployment for us to wake up and realize that the New Deal was a failure and so was Obama's stimulus package.

Ron Paul's Opening Statement to Bernanke on 2/25/09

http://www.youtube.com/watch?v=aW2V50AS7K0

Ron Paul makes a good point when he states that capital doesn't come from credit. There has been a misconception that more credit and more consumption is the solution. It was easy credit that got us into this mess and now we think more credit will solve it. The same idiots that we are looking up to to get us out of this situation are the same people that got us into this situation.

Redistribution of Wealth

Obama's budget was published today. His visions of socialism and redistributing wealth is becomming a reality.

"The budget proposes to raise taxes on couples earning more than $250,000 a year, generating $636 billion over the next decade. To do so, Obama proposes raising the top two marginal income tax rates to 39.6 percent and 36 percent, limiting itemized tax deductions and increasing taxes on capital gains to 20 percent from the current 15 percent.
The plan would also raise taxes on many Wall Street financiers, pare subsidies to insurance companies participating in the government’s Medicare health-care system by $170 billion, and trim spending on some defense programs." Bloomberg

This is exactly what our country needs not to do. Increasing taxes is not the solution. Decreasing taxes is. The individuals who make more than 250k per year are the entrepreneurs who create jobs. By taxing this group, you are punishing the people who create wealth for this country. There will be harsh consequences in the future for this decision. The worst thing you can do in a recession is increase taxes. I mean don't the individuals making 250k plus pay enough taxes as it is. Redistribution of wealth is here and it is alive. Last point, how can increasing the capital gains rate to 20% be a positive for this country. Its bad enough that US corporations pay one of the highest income tax rates in the world. Now, Obama wants to raise the capital gains rate. We need to entice investors to invest in the US, not scare them. Increasing taxes on the so called "rich" is not the solution. Wake up people. This is just the beginning.