Letters to the Editor
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An economy which requires the destruction of wealth
Economists could increase the savings rate by counting home equity. Home equity isn't measured in the present set of economic figures. Economists consider savings the enemy, Bernanke has spoken of the global savings glut as a bad thing. Interest rates are low, as a matter of economic policy. Economists want to drive people out of safe investments, sometimes called savings, and into investments which would stimulate economic growth if there was any need for investment.
It's difficult to get your arms around the concept, that there is a bear market in credit. The world has more credit than it needs. Financial institutions have trouble making money, when no one wants credit, and because there is no need, borrowers have little chance of investing the money they borrow, and making money from their investment. No where is this more true than with the consumer, who have few prospects of finding a better job next year. Now the Fed needs to put a bit more pressure on money market savers, by stimulating inflation, while holding interest rates down. That will certainly force savers to either spend, or invest in things which would otherwise stimluate economic growth. This economy engineered by several generations of politicans requires the destruction of wealth.
On the one hand Bush has sought to make the Federal Reserve Chief the assistant to the Secretary of Treasury, and Ron Paul has advocated abolishment of the Fed. Both men really want the same thing. As voters there is no clear choice, as consumers, and taxpayers, one cannot afford to live in an inflationary environment without accessing cheap credit. The political solution is to make credit even cheaper, or perhaps even free. A tiered credit system suggests another form of class warfare. Rather than nationalizing US oil reserves, politicians should make the Credit Card companies GSE's, with Fannie and Freddie lines of consumer credit. Then we can get on to the next bubblem which is preferable to destroying the system we now have.