As I have argued (and here), and others have argued, the underlying fundamental cause of the current financial crisis is an overabundance of savings, due to boomers saving for retirement, dating from the late 1980s, and too few places to invest the savings.
There are, if my hypothesis is correct, only two possible, long-term solutions to this crisis:
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Economies, including wages and salaries, contract sufficiently that people do not have money to save and invest; or,
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Economies grow through private companies whose growth can reward investors who have invested their savings in them.
If (1) occurs, there will be a world-wide depression and we will have more to worry about than the current financial crisis. Presumably nobody wants that.
That leaves (2).
How can (2) happen? That is, how can we get more companies (corporations, partnerships, small businesses, entrepreneurial startups, i.e., the entire private risk sector) started and building on the road of growth, going public, and accepting investments?
The main way to get (2) is to reduce the tax, regulatory, social welfare, and special interest mandate burdens on businesses. That's all it takes. Free the entrepreneurs. Free the business people. Free the inventors. Let them do their thing. In a free enterprise capitalist system. (Perhaps I should say, since any American can be the entrepreneur, the business startup person, the inventor: free us!)
The major way to thwart (2) is for government to grow bigger. Government programs are not growth enterprises in which investors can invest and obtain returns to build nest eggs for retirement. Governmental regulations and taxation policies do not encourage productive enterprises; they stifle such enterprises. Government does not provide investment opportunities for savings. Government taxes savings and investments and returns on investment, preventing earnings' accumulation for retirement, or other investor purposes, or for re-investment to further spur growth.
The kinds of economic remedies, government programs, investments, taxations, and regulations proposed by Obama are exactly those actions that will prevent recovery from happening and create a permanent economic crisis. Such governmental policies, whether in the form of full-blown communism, e.g., Soviet Union, China, Cuba, or democratic welfare socialism, e.g., post-World War II Europe, have uniformly failed. The countries that practiced them have had to shift to private risk capitalistic systems to obtain wealth to improve the lives of their citizens. Obama has not learned this history lesson, or economics lesson; he clings to the historically proved failed ideas of the past.
The only way out of our financial crisis is to generate private enterprises that are productive--manufacturing products that add a lot of value. They need to be the kind of products that other persons, in selling them, using them, repairing them, can add even more value. By and large, such products will be heavily technological, either in manufacturing inputs, or in the chain of distribution, sales, use, re-use, maintenance, and disposal, i.e., the entire life history of the product. Anything less and we are doomed.
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