I
just finished reading the book, “The Aftershock Investor” (2014) by Wildener
and Seitzer, and it convinced me that America is headed for another financial
crisis; one that will be more severe and extended over a longer period of time
before showing any signs of a recovery than the event of 2008. What this
country is experiencing now is the illusion of an economic recovery based on
the Federal Reserve pumping massive amounts of dollars into the economy but
sooner or later this bubble is going to burst. The authors indicate that since
2008 the money supply has grown from $800 billion dollars to more than $3
trillion (275% or at the rate of 34.375% annually since then). Not only that,
but the reports published by the Federal Reserve show that government debt was
$930 billion dollars in 1980, rising to $16.8 trillion dollars in 2013; that’s
a whopping 1706% during the time period and 51.7% annually.
According
to the White House Bureau of Economic Analysis, Wildener and Seitzer mention
the total increase in GDP between 2008 and 2012 was $2.8 trillion dollars,
while government spending for the same period was $4.7 trillion. Also, in that
same report, GDP growth for 2013 was $315 billion dollars and government
borrowing/debt was $750 billion dollars. This trend is unsustainable and sooner
or later the chickens will come home to roost. Creating massive amounts of
paper money faster than the economy is growing is the very definition of
“inflation” as this devalues the dollar, resulting in higher costs for goods
and services; not to mention that this will cause the Federal Reserve to raise
interest rates. I think the answer is to increase productivity in the
manufacturing and services sectors to increase GDP. This is done by making
America more business-friendly by changing or eliminating job-killing
regulations and international trade deals that stifle corporate investments in
domestic industries. Why should American companies use all of our talent and
technological and innovative know-how to grow the GDP’s of other countries when
they should be doing this here?
The
federal government should consider letting the individual state legislatures,
where some of the large multinational or Fortune 100/500 companies are located,
decide or work out with these industries what the best environmental and worker
protection policies for them; or let the citizens choose by ‘direct democracy’
activism through ballot referendums and initiatives. This might be a better
solution than impose a levy on imports or tax corporate profits; which would
not raise enough revenue anyway. Many
people who think that the economy has recovered fail to take into account that
in a ‘macro’ economy there is usually a “lag time” of several years between
expansion of the money supply and when inflation occurs; although if one has
been paying attention the cost of things are more than they were a few years
ago. So, members of the Senate and the House of Representatives need to work in
a bi-partisan or non-partisan way to enact legislation that will bring
businesses back to America, not have the Federal Reserve keep filling up that
paper money balloon because it can only expand so far until it finally bursts.
Robert
Randle
776
Commerce St Apt 701
Tacoma,
WA 98402
May
23, 2017
