Thursday, June 11, 2009

De-couple Economic Policy and Social Engineering

Keynesian Deficit Government Spending and Quantitative Easing are two Economic Theories developed in an environment of low or zero Government Debt. Simultaneously deploying both Keynesian Deficit Government Spending and Quantitative Easing in an environment of high current Government Debt, with debt increasing at an increasing rate, is at best a very dicey experiment.

The US Economy can likely withstand the above mentioned propositions along with its many, many unintended consequences. However adding Social Engineering such as Nation Health Care, Cap and Trade, etc., etc. will cause a major Economic Train Wreck. The economy needs no costly changes at this time. Sorry, we are broke.

Add the laundry list of Obama proposed Tax Increases and it becomes a spectacular Economic Train Wreck. You can not depress Consumer and Business consumption with increased taxes during a major recession. You can not depress Private Capital Formation with increased taxes, leading to Private Sector Jobs, during a major recession.

Economic Policy and Social Engineering need de-coupled and handled as separate items.

The Economy needs repaired first. Even after economic recovery no added entitlements. Why? Social Engineering of the past needs repaired first. The current entitlements represent a huge unfunded future debt and must be accounted for, budgeted for, and corrected.

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