Posted on 12/05/2010 6:41:52 AM PST by OwenKellogg
For those old enough to remember, the late 1970's and early 1980’s were consumed by periods of high unemployment, high inflation, and devastating interest rates. The national debt was almost $1 Trillion. Interest rates were in the high teens and inflation was equally high.
President Reagan, in a national debate, asked the devastating rhetorical question which haunted then President Carter, “Are we better off today than we were four years earlier?” The answer to the question was intuitively obvious to the most casual observer at the time and is believed to have had a significant effect on the outcome of the presidential election that year. Unfortunately, since the1980’s, the impact of continued deficits under both parties, systemic undermining of American industry, and the wholesale degradation of our nation’s critical infrastructure, have combined to yield extremely high unemployment, recklessly low interest rates, and volatile and unrecognized inflation. The dichotomy of the economic realities of low interest rates, deceptive and volatile inflation rates and high unemployment do not bode well for our economy and our citizens.
The volatility of the markets since the 1960’s will likely become more exaggerated and strike fear into the hearts of even the strongest. The solutions exist and true leaders need to emerge to unite rather than divide. Only by concerted and coordinated effort by all leaders including government, business, labor and retirees will a pending disaster be averted.
First, the extremely low interest rates, while on the surface a help to some, have impacted retirement incomes due to lower interest rates on investments to an already debased stock market. While incomes are declining for our seniors and retirees, property taxes, utility rates, and drug and medical costs are escalating. The squeeze is on.
At the same time, low interest rates should be stimulating for the economy. However, the reality is that such extremely low rates when combined with record deficit spending set the stage for a potential economic disaster. For interest rates to remain so low with such high deficits may indicate that an extremely serious economic contraction or depression is already in the making.
Should interest rates increase the impact on the federal deficit and our national debt will be destructive since most federal debt is short term in nature and would reprice at higher rates almost immediately. We would merely go from one crisis to another.
Second, the published inflation rates are nothing short of deceptive. The market basket being used to measure inflation must exclude any item which I personally purchase! For example, the CPI declined in April 2010 by .1% and increased by a modest 2.2% year over year. The deceiving aspect of these inflation figures relates to the underlying problems of increasing medical costs for seniors, higher utility bills and transportation costs for most, higher property taxes for all (including renters), increasing state and federal budget problems and deficits, and unquantifiable unfunded pension liabilities.
Finally, the higher unemployment in the minds of many of the senior managers that I talk with relates to a large extent as a purging of many employees who have not been able to effectively contribute to the companies for whom they work. This type of unemployment can be extremely difficult to eliminate since it is structural in nature. We may find ourselves with a permanent unemployment rate closer to 7% to 8% rather than the historical full employment unemployment rate of 4-5%.
To defeat the triple threat of inflation, higher unemployment, and deceptively low interest rates, we must act now. Failure to act will merely exacerbate future volatility with unpredictable results. For starters, we must:
•Curb government spending and reduce our national debt
•Audit the Federal Government and produce a meaningful balance sheet and cash flow statement to include all unfunded liabilities.
•Audit the Federal Reserve to determine the true financial vulnerabilities in our banking system.
•Reduce and streamline government regulations to help businesses reduce costs so they can begin rehiring
•Sell off state owned enterprises to reduce costs and improve efficiencies
•Emphasize a national policy of rebuilding of American manufacturing
•Provide significant tax credits for education and retraining of American workers.
•Make free international trade a national priority.
For our Nation to survive, realistic solutions must be acted upon quickly. True leadership is about selfless sacrifice and not selfish behavior. Working together solutions will be found. Apart, defeat is certain.
*****
Frank Ryan, CPA ran for the U. S. Congress in 2004 and again in 2010. He specializes in corporate restructuring and lectures on ethics for the state CPA societies. Frank is a retired Colonel in the Marine Corps Reserve and served in Iraq and briefly in Afghanistan. He is on numerous boards of publicly traded and non-profit organizations.
Although written earlier this year, Colonel Ryan's solutions are still relevant for a congress wrestling with the right way to go:
For starters, we must:
•Curb government spending and reduce our national debt
•Audit the Federal Government and produce a meaningful balance sheet and cash flow statement to include all unfunded liabilities.
•Audit the Federal Reserve to determine the true financial vulnerabilities in our banking system.
•Reduce and streamline government regulations to help businesses reduce costs so they can begin rehiring
•Sell off state owned enterprises to reduce costs and improve efficiencies
•Emphasize a national policy of rebuilding of American manufacturing
•Provide significant tax credits for education and retraining of American workers.
•Make free international trade a national priority.
About 50/50! ???
I’d be hard pressed to find something on that list that is BS.
Please understand that I would not be in favor of managed trade treaties that are disguised as free trade. But, putting aside the emotional triggers of the “free trade” debate, what else is BS.
The above three for starters, nothing more than more command economy!!
Sell off state owned enterprises to reduce costs and improve efficiencies...
You’re not in favor of selling off GM, Amtrak, and the post office? That would be a command economy? I’m not getting it.
Excellent start!
To begin with, America's Founders never envisioned that the "state" would own and run "enterprises." They understood human nature and the human tendency to abuse power, once delegated. Owning previously private companies would never have entered their minds.
Second, to "emphasize a national policy" is not morally equivalent to a "command" economy. Rather, it would be a return to what James Madison called "the benign influence" of a responsible government. The "national policy" of the Founders of this free society was to prohibit the government from interfering in what they called the "individual enterprise" of "We, the People," thereby allowing opportunity, creativity, innovation, and prosperity to thrive.
That is a "benign" government--not one of "malignant" tendencies to grow and stifle economic the growth and prosperity of its citizens.
Next, to "provide tax credits" for education and retraining is the opposite of the current power-hungry controllers of education. Rather, they believe in adding more and more "taking" in "taxes" so that they can buy votes from the huge bureaucracies they have created. These ideas are the opposite of America's Founders' principles.
The writer cited on this thread did not provide recommendations for state command, but for freeing up the citizenry to accomplish what Americans accomplished in the first 200 years.
Thank you. Colonel Frank Ryan is a small government, constitutional government advocate. He believes in what the founding fathers gave us in the way of government. He is opposed to the way we have moved towards a collectivist government.
I hate putting any more words in his mouth. But he has made his own ideas public on his website ( http://federalistpapers2.org/index.htm ) and in the media. You can also find him on Youtube ( http://www.youtube.com/watch?v=k9gLV-M5_G8 ).
As a retired Marine Colonel and a successful businessman with a strong financial background, he speaks from knowledge and experience. Our conservative movement should be proud to have a man like this fighting on the front line in this battle of ideologies.
Did the Colonel win an election this year? Hope so.
He didn’t win this year. Hopefully, he tries again in 2012!
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