The National Economy Stinks From Mismanagement
Read more articles on Finance and Politics.October 10, 2007
Posted by neillevine
October 10, 2007
Posted by neillevine
216 Views
As most sophisticated voters should already know, the American economy has serious problems that need immediate attention. Comparatively high interest rates, for example, have made it harder for potential purchasers of big ticket items such as cars and homes to be able to afford the requisite payments leading to sluggish auto sales and resulting in large inventories of unsold homes.
The alleged official motivation for increasing borrowing costs has been that if demand is reduced by making increased spending more difficult the resulting inflation, that is, rises in prices caused by “excess” demand will be lessened. However, rising domestic prices are not as serious a problem as the federal budget deficit, the comparatively long standing balance of trade short fall and increasing energy imports accompanied by rising energy prices.
The shortfall in exports matching imports so this country can pay its bills is attributable to this country buying more than it is selling overseas. For example, the Chinese, amongst other countries, are piling up a large surplus but has been slow to spend. Pressing them to spend more is politically popular because their surplus is quickly increasing and there are a laundry list of merchandise and services the hopefully could be talked into purchasing to improve their way of life.
Instead the current immediate salve for the American financial bleeding has been to allow the formerly almighty buck to decrease in value, driving up the cost of imports and making American exports cheaper, but also stoking some inflation and selling more goods and services overseas than are comparatively merchandised at home.
There is also a big federal budget deficit adding to the problems. A problem that is not helped by higher interest rates and which also makes solving the balance of trade problem more difficult. Greater spending on whatever favorite political problem also does not (obviously) help reduce the imbalance. Then there are alleged problems with Social Security and Medicare and so-called solutions.
Finding real world solutions would make dealing with these problems easier and do more domestic good including such options as replacing expensive energy imports with economically sound solutions. Then there is the federal indifference to wildfires, flood control and using the internet to fight crime. Even solving a problem like the influx of illegal immigrants is going to cost money and may not reduce the tax cheating and illegal use of forged documents.
Obviously, these are not a simple problems and will not be solved by simple minded solutions. Of course, as citizens, everyone has the opportunity to stop, look, listen and see what gets done.
Just keep your internet connection open as developments unfold in real time.
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