INSIGHTS 228 — GETTING READY TO TALK ABOUT THE ECONOMY

Advisor's vault doorThe Advisor was lost in thought, in between talks from his only visitor, the President.

The President has been so candid recently. I have to get ready to ask him some more challenging questions. I think he enjoys the challenge. He’s got to be immersed in the current economic crisis so I’ll start getting my background material ready. Many Americans do not see the economy, the process of making and selling things, as being different from the stock market. But they are two very different areas. While one affects the other to some degree, it is very difficult for experts to agree on the exact cause and effect of changes in the stock market. Economists talk knowingly about the state of the economy and what is needed to improve its performance. But in reality they should be called political economists because their analysis depends on whether they are supply-side economists or Keynesian economists. 

The President’s progressive wing of the Democratic Party is nearly exclusively Keynesian. Those people believe the level and management of government spending is the key to growing the economy. The opposing side of free market/supply side economists believe growth can only come through the capitalist process of making and selling products outside the governing process. The fewer the regulations and the lower the taxes, the more the economy is free to grow. In their minds, a growth rate of between 4 percent and 8 percent is ideal with a tax rate on corporations around 15 percent.

The Keynesian monetary policies have never worked anywhere, though they were tried extensively during the Roosevelt era. Since government spending on sectors such as infrastructure can only be financed from taxes from people and corporations, Keynesian management of the economy inhibits the growth that is necessary to finance needed infrastructure, human services, and the military. Most everyone is in favor of these items but only the progressives with their Keynesian finance managers believe spending on social welfare and infrastructure stimulate the economy to grow. The first place they look for money for social services and infrastructure is the military budget. Few progressives believe in maintaining a strong military. I must remember to ask the President about his views on Keynesian economics.

Regardless of the financial philosophy, effectiveness of the process must be based on a real reporting and understanding of the facts. When the administration and talking heads go on about the well-being of the economy, they are mostly talking about the stock market that has done very well. Indeed it should with the Federal Reserve printing $86,000,000,000 per month for a program called Qualitative Easing. This level of printing money went on for many months. If you could afford to invest, you did well. The President’s program, instead of distributing wealth to narrow the gap in income between economic classes, actually widened the gap. Turning from the stock market to the business of making and selling things, the real economy, you see a much different picture. Real unemployment is closer to 12 percent than the 5 percent the progressives claim. Employment participation rates are lower than at any time since the 1970s. There are more people on food stamps and welfare now than ever before and that is not just due to the growth in population. Health care costs are growing. Wages are stagnant. Graduating college students cannot find jobs. Student debt is way up. People have given up looking for non-existent jobs. The economy is way below the growth rate needed to sustain services and our national debt. The only measureable that is up is the number of people on welfare. I wonder what the President will say about his commitment to the redistribution of wealth.

The last area to ask him about will be the energy sector. I wonder what he’ll say about the Saudi’s program of pumping oil at a level that is continuing to increase the glut of crude on the market today. Doesn’t he realize the Saudis dumping oil on the energy market is motivated by their need to remain the predominated supplier of the worlds oil and to weaken Iran, Iraq, ISIS, Russia, and the United States? Their strategy is working. Many oil drillers in the United States are gone. They and others like them around the world cannot profitably sell oil much below $60 or $70. Unless the Saudis change their strategy, the current glut of oil may be with us for a few more years.

The Advisor stopped his pacing and his thought process.

I think that is enough for more than one session with the President, he thought, feeling more prepared.

 

This is an account written by a fictional advisor who doesn’t exist but should.

Check out the latest Jack Brandon mystery suspense novel at your local bookstore. Follow the author on Twitter @factsfictions80.

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Filed under Barry Kelly, Capitalism, class warfare, Conservative views, Eight Decades of Insights, financial policies, foreign policy, Intelligence & Politics, Iran, Obama, oil, political solutions, Progressives, Russia, Saudia Arabia

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