Economic Tidbits

While Washington fiddles over the porkulus bill before them, and President Obama and Chairpersons Reid and Pelosi march us towards depression, here's a caution from Dick Morris today about out hyper-inflationary future:

"In the seven years between 2000 and 2007, the money supply rose from $600 billion to $800 billion. In 2008, alone, it more than doubled from $800 billion to $1.7 trillion! We cannot sustain this level of increase in the money supply without having way too much money chasing way too few goods and services, sending prices up into double digit inflation. While the economy is in shell shock, at the moment, we face deflation. But once it begins to come back and the dollars come out of hiding, we will find the resulting inflation intractable and very difficult to cure."

In news closer to home, the CEO of AT&T (my employer) today asked the Board to not pay him a bonus for 2008, which they obliged. At the same time, he promised no management salary increases in 2009, but, the board did approve management bonuses, thus much, much reduced from previous years.

...end...

Posting

Wow! It's been over a month since I last posted.

Sorry, if you're a regular reader. Christmas was a busy season around our house, and I have been pretty busy at work preparing for a potential calamity.

Plus, the guys at The Sub Report and our other submarine bloggers keep a good job keeping you abreast of submarine issues, and Obama has basically become Bill Clinton III, so, what more is there to say about him until he actually starts governing?

Since it's about a week away, all I will say to you is: BEWARE!!!!!!!!!!

The Left is in control, and rather than do those things that will actually get this economy out of the mess it's in, we have Obama proclaiming that only the government can save us. If that's the way we're going to treat this economy, we're all screwed.

We'll get a bunch of roads out of it, we'll get another "Stimulus" check, and the unemployment rate will keep rising, and growth, if it ever returns, will be stymied by the massive deficits we are ringing up.

When I have more time, I'll discuss, and point you all to links that blow away the myth of FDR as savior of the Depression. Passive students of history know WW2 saved us from the depression, and that the statist policies of Hoover from 29-32 and FDR from 32-40 were abject failures.

So, what will save us this time?

As I have said before, we need massive reductions in marginal tax rates - FOR EVERYONE - but mostly for the BASTARD RICH. We need the people who have real money to invest, to invest.

We also need corporate tax rates lowered, we need cap gains rates cut in half, and we need the government to stop pushing the phony-baloney global warming crap, put in place incentives to drill for oil, and allow the automakers to go into bankruptcy, if that's what their business model leads them to.

Without those steps, or some portion of them, we will see a prolonged recession, more unemployment, and a weakened economy when it finally does turn around.

So there.

Fixing the Economy - My Plan

Just caught a little glimpse from CNN of Obama's jobs plan. Looks a lot like typical Liberal fare. Infrastructure projects, a tax credit of some kind. Roads and bridges are good, and a necessary function of government, but, let's be serious here.

Unless we're willing to really endure some corrections - like lots of foreclosures, and the bankruptcy of the automobile (and associated) industries, in order to lower costs structures and make these businesses competitive - we need some drastic, supply-side work done.

If Obama really wants to jump start things - let's go with my plan:

1. A serious and drastic cap gains tax reduction - if not 0%, how about a reduction to 5% or 7.5%. That would get some capital spending started immediately.
2. A serious income tax reduction, not tinkering, like Obama wants to do with no changes on "the rich," but a real reduction, on the order of 30-50% on ALL taxpayers, especially those rich investors.
3. Privatize at least a portion of social security. Get these obligations off the government's books, and get this capital into the market, where it can help spur investment.
4. While I dont' want the automakers to fold, I do want them to restructure. Work something out that is a pseudo-Chapter 11 for them. Get real concessions from the unions who hamstring them, and get rid of their rotten management.
5. Quickly devise a plan to get the government out of the financial industry.
6. Repeal rotten laws like Sarbanes Oxley.
7. Get rid of CAFE standards and some of the other mandated standards the automakers and other industries must deal with.

The path forward needs less government, and more capitalism, not the opposite. If we continue on the tack we are on, we will wind up with 2 years of recession and a weak growth cycle.

Drastic times call for drastic measures. Let's have some.