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Who is to blame for this economy.

Posted: September 16, 2011 in Uncategorized

I hate to tell you people but the president has very little control over the economy. The entity with the most control over the economy is the American public collectively, for what we spend our money on dictates what gets produced, and where, what gets sold and where, and what jobs are created and where. Then it’s the FED and Big banks that have the next most control over the economy; because they set interest rates control credit, and the money system, and decide who gets loans. 3rd most influential in the economy is Congress, for they set tax rates, spending and create regulatory agencies. Since 2008 they have increased spending and decreased taxes in an effort to help the economy which had some effective results in the sense that corporate profits, GDP, and the stock market are all doing quite well. Not to mention the fact that job losses also stabilized. Coincidentally all of these reached their low point the month that the infamous stimulus plan was passed. The reason many jobs are not being created during this so called recovery is simple: people are not confident, that’s it.
When people are confident to spend, invest, innovate, hire and produce the economy does well, when people are scared it does not do so well. People are scared, and so they are saving their money for the first time in 40 years. This is technically a good thing; however, our economy is used to having people spending more money than they have. If this high savings rate continues it will take about a decade for unemployment to go down to its normal level of 4%. Alternatively, if people are a little more confident in the economy, and buy that appliance they need to replace, or do that home repair that they have been putting off, or take that vacation they have wanted to, then the economy will do much better. No we don’t need to go back to spending more than what we have that is what caused the US economy to collapse in the first place, but we need some confidence.
Don’t give me the crap about how ‘uncertain’ people are about taxes, regulations, or health insurance prices; because that is a cop out. Has there ever been a time in history that people knew with certainty that in 2,5,10 years what taxes will be? What health insurance will cost? What regulations will be? Ever? We never know exactly what the future holds, but you buy that appliance, you do that home repair, and you produce that extra widget; because you are confident that in the future it will help you, and that is what we are missing. So before you place blame for this lame economy on Obama or Bush take a look in the mirror first. The fact is that the government does not control the economy people do that is the point of capitalism.