Obama Says US Needs To Act Quickly

Obama says the US needs to act quickly in the economic crisis. He says unemployment may exceed 10%. Its probably already over 10% because the official unemployment figures are totally false. They only count the people who are receiving unemployment payments; but once a person’s unemployment runs out, they are no longer counted as unemployed.

No one in the government seems willing to call a spade a spade and say that we are in the beginnings of a depression, but that’s what it is.

Recession and depressions are caused by the same thing. People stop buying goods and services. In any economy, it is production which provides jobs and income for people. When people stop buying, there is no point in producing, so people get layed off or their hours get reduced. When that happens people have less money to spend, and therefore buy even less. Its a vicious cycle.

What starts the downward spiral? The immediate cause is any event which causes the population to reduce its spending, like a sudden loss of wealth (housing bubble popping), a disruption in availability of resources (like an oil shortage), a natural disaster displacing a large number of people cutting off their income, or a large scale terrorist attack like 911 which through fear caused people to stop their normal spending, and finally, tax increases which reduce the spending power of the populace.

Government handouts to banks, and car makers, and insurance companies, and retailers do nothing to stop the cycle, as they do not address the basic problem of the population not buying goods. In fact they eventually make it worse because the government taxes people more to pay for their handouts. New York State is a good example with their announcement of 88 new taxes in place for 2009 so the government itself can go on wasting taxpayer money even when the taxpayers have less of it to spend themselves.

Handouts and stimulus packages will have even less effect now than they did during the great depression, because so much of the industry that supplies peoples needs have left our country and now reside in Asia. An economic stimulus package now will help China more than it will the US. Give every taxpayer $1000 to spend and watch the parking lot at Wally World fill up as people rush to buy all those Chinese goods. Once the money fills the cash registers, we are no better off than before. Any country that cannot produce the essentials of life for its own people cannot remain a First World Country.

What we need is incentives to bring back our manufacturing to our own shores, and provide jobs for our own people. We need jobs and industries that produce wealth, and that means manufacturing. Washing each others windows does not create wealth. We need legislation that encourages new manufacturing, and enables them to be competitive on the world market. Otherwise, the downward spiral will continue for years to come. Other things may work short term, but if America is to remain a country of wealth, it must regain its manufacturing base.

I doubt that any of our government leaders will do anything useful to save our economy. What they will do is protect themselves while trying to make the public believe they are working to solve our problems. Well, buying that line is the one thing which will not save our economy. I’m not buying it, and neither should anyone else.

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