Posted by
Tazman60 on Thursday, September 25, 2008 10:08:55 PM
The economy in the U.S. today is out of control as most people already know. The price of everything is going up. Everyone is being hurt and incomes cannot come close to keeping pace. The Democrats blame President Bush and the Republicans, the Republicans blame the Democrats, and everyone blames those nasty oil companies. The Federal Reserve seems helpless to correct the problem.
So what happened to create the current problem in our economy?
To understand what went wrong we have to go back to the 1970’s and the then oil crises. OPEC had been formed and having taken control of their oil fields imposed a reduction in production and an increase in the price per barrel of oil.
The world went into shock and the price of gas shot up almost over night. The Arab world had found a new control over the western countries and started down the road to immense wealth.
Many economies around the world struggled, the U.S. had to take the Dollar off the Gold Standard, allowing it to float based on the strength of the economy, we simply did not have enough gold to cover the dollar debt.
In 1977 the Prudhoe Bay oil field in Alaska came on line and the oil prices stabilized, the economy recovered, but the damage had been done and the warning that we were not in control was clear. Exploration and recovery of more oil would help but not solve the long term problem, many argued, plus fossil fuels are a polluter, other fuels needed to be developed. But once again we fell into a state of complacency, imposing restrictions on drilling in areas deemed environmentally sensitive.
Meanwhile our imports of everything increased dramatically led by cheap economical foreign cars. Our balance of trade was out of control, the Federal Reserve continued to create more money and put this into the economy, and our congress had no plan to remove the threat posed by foreign oil. Had this been a military situation a plan would have been developed, put in place and carried out with urgency. After all we went from no technology, no infrastructure, and no plan, to landing a man on the moon, to accomplishment in less than 8 years from the moment that President Kennedy announced that the race was on.
Today we find ourselves in dire straights, the value of the dollar has been greatly reduced, our imports are out of control, we export jobs, and we have no oil independency plan. In short we the consumer are getting the shaft. And now, to add insult to injury we are being asked to bail out the industries that congress forced into bad policies and loans.
As part of the bailout plan there should be a hiring freeze on federal government employment and an annual reduction of 10% of federal employees. Also go back to these loans that the people made in good faith but due to loss of jobs or disabling injuries could no longer afford under their present terms, but just needed time to recover and rewrite them. Be creative, help the people stay in their homes and make bad paper good.
What we need to do today is to free up drilling in every location in the nation and the continental shelf. This announcement by itself will send the message that we are done fooling around with OPEC. The time frame to bring these reserves on line is not a factor. Oil prices will drop, the Arab’s reserves are being depleted and they will want to hang on as long as possible by driving the price down and again discouraging more oil production here.
Stop paying farmers to not grow crops and have them instead grow sugar beets. This was a crop that we used to grow in abundance, and instead of using a food crop to make ethanol use sugar from the beets. This would give us 10 times the production amount of fuel from the same amount of raw product, not to mention a better fuel in the process. Also mandate that all new cars sold in this country be flex fuel and all gas stations have an ethanol pump. We need look no further than Brazil for the proof of this concept. Along with this, implement a national program to collect and convert used vegetable cooking oil into bio diesel. A simple reward and benefit program put into place to reward all citizens for their contributions, like credits to be used for purchases of other commodities will produce an abundance of bio diesel, reducing the amount needed from oil.
Next we must cut all imports to a point of balance with exports. This move will help to stabilize the dollar around the world, as the dollar gains strength the cost of imported goods including oil drops. Simple buying power, stronger dollar equals lower costs. If companies complain about this they can come here, build plants, hire Americans, reinvest their profits in the American economy, and become part of the solution instead of the problem
Next develop a Fed monetary policy that makes sense, only allow the congress to go into debt in an amount equal to the value of our exports over the cost of imports.
Next on my list is eliminating the income tax system and all other federal taxes on capital, estate, interest, basically all federal taxes at every level and replace it with a consumption tax, the Fair Tax, which taxes only retail sales. Pay tax to the federal government on services and retail purchases only, with this form of tax everyone pays a fair share, you, me, the illegals, the tourists, the rich and poor. This would be a real permanent economic stimulus plan, putting real spending power in the hands of the people. There would no longer be a problem with funding Social Security, Welfare, Medicare and Medicade, we would even have enough left over to give aid to families for health care. All programs would be fully funded, jobs and production would increase, with no longer an incentive to move companies and jobs and capital off shore. Capital would expand with the influx of companies and jobs.
All of these things must be done now, collectively, this would send the message to the world that we are taking back our place as the strongest economic nation in the world, and force the Arab nations to negotiate on our terms.