More Ramblings on the Economy

The word "juice" the economy quickly sounds somewhat desperate to me. It seems to me that the first solution to solving our economic woes is simply to cut interest rates by another 75 basis points and get the Fed Funds rate down to where a more normal interest rate curve can develop. It probably should have been done some time ago. Then there wouldn't be such disastrous write-downs from delinquencies.

A fiscal plan of additional tax cuts always sounds like a good idea, but in the end, won't the government just have to borrow to pay for the wrong kind of tax cut? The best solution is to have a tax cut that provides enough economic growth that the returns will more than compensate for the cost of borrowing.

Is there much inflationary capital left to offset our problems of the past several years? It seems to me that we have spent a lot of our inflationary capital. We don't appear to have as much inflationary capital available to offset poor choices that we may make in the future. Along with cutting taxes for the rich, such as cutting them on dividends, it seems that we should put more money in the hands of those who have a higher propensity to spend. Doesn't that mean cutting consumption taxes? But that is heresy. Isn't it the rich that provide jobs for everyone; the so-called trickle down philosophy? Maybe in the short run, it is time to help both the rich and the poor until we get on a more solid footing.

So what is the answer? What will incentivize each of us to work and produce? Being happy and feeling good is certainly important. Success helps. Optimism works. Proper moral behavior couldn't hurt.

Maybe President Reagan's favorite scripture; the one that he had the Bible opened to each time he took the oath of office; is a good starting point. It is in 2 Chronicles 7:14, which says, "If my people, which are called by my name, shall humble themselves, and pray, and seek my face, and turn from their wicked ways; then will I hear from heaven, and will forgive their sin, and will heal their land."