Exactly. The second thing that needs to be done is to eliminate all taxes on interest and dividends. Our tax policies have made us a nation of spenders as there is no near term incentive to save. In fact, saving is penalized.
Back in 1986 we threw $2,000 in my wife’s IRA Dreyfus Fund which tracked the Dow Jones. Last week we cashed it in for $13,234.30. An average annual return of about 7%.
However, as of December 31, 2007 the Fund had a value of $13,200, having earned an average return rate of about 9%. BUT as of December 31, 2008 the value of the Fund had dropped to $8,140, a drop of more than $5,000, 38% in one year!
You put your money in and you take your chances.