WHAT'S WRONG WITH THE ECONOMY?
The nation is experiencing several seemingly unrelated economic troubles. But these troubles actually have only five
basic causes, with one underlying cause.
Within the first years of the third millennium, the economy of the United States went into a slowdown that increasingly
worsened. The following troubles were evident:
- 2001-2008: The economy reduced in size, and never really increased afterwards.
- 2002-2008: Many businesses closed or moved out of the country.
- 2003-2008: The Federal Reserve has to choose between controlling inflation and keeping interest rates down.
- 2005-2008: Variable-rate mortgage rates rise to the point where homeowners can't pay the mortgages. Many foreclosures.
- 2006-2008: Oil prices skyrocket.
- 2007-2008: More business failures, and unemployment reaching 40 percent in areas.
- 2008: The stock market goes crazy as mortgages and mortgage companies fail.
- 2008-2009: The government stimulus package benefits mostly government.
- 2008-2009: The economy does not recover.
WHAT'S GOING ON???
According to economic analysis, the following five causes are responsible:
- Homeland Security - While the 9-11 attacks themselves did not harm the economy much, the
government overreaction to the attacks did much damage.
- The suspension of aviation caused a serious downturn, because many shipments were frozen where they happened to be when
the order was given. Shipments were delayed or eliminated. Perishable produce was destroyed, because it could not be
shipped before they rotted. People were unable to do their jobs, because they were not where they were supposed to be.
- The export bans caused many businesses to relocate outside the United States, with a resulting loss of jobs.
- The security checks prevented many shipments from using airlines. Many people refuse to fly because of the security
requirements. Others are afraid to fly, due to the threat of terrorism.
- The closure of the stock market for many days prevented trading, causing many to lose money.
- Homeland security continues to depress the economy by making business cost more.
- Government Reactions to the 9-11 Downturn - Most governments did exactly the wrong
thing to do, in response to their losses of revenue caused by the 9-11 downturn, and again as the recession hot:
- Most governments raised taxes to offset losses in revenues.
- All but one state government raised taxes, to replace the revenue lost during the downturn.
- The federal government also raised some taxes.
- Local property tax assessors raised tax assessments, to get their governments more money to replace revenue.
- Many governments raised business taxes too.
- State governments raised taxes again in 2008 and 2009, to replace the revenue lost from the
- Selfish, greedy governments were thinking of their own coffers, instead of the overall health of the economy.
- Raising taxes in a downturn is the wrong thing to do.
- It makes the recession worse.
- It makes a permanent cut in the production level in that jurisdiction.
- This happens because the economy must run on the untaxed portion left over after taxation:
- Business taxes do not affect business profits, even though they are levied on business profits. They are paid through
increased product prices, and through lower employee wages.
- All business taxes are thus paid by the consumers who buy products from the taxed businesses, and through the lower
- Because consumers pay all business taxes in higher prices and lower wages, the average consumer paid 70 percent of
their incomes in taxes in 2003, whether rich or poor.
- Because a business tax is essentially a flat tax on the wage earners, the poor pay much higher tax rates.
- Renters pay the business and property taxes charged to the landlord, contained in their rent payments.
- This is the cause having the greatest negative effect on the economy.
- Unscrupulous Lenders - Strapped by the higher taxes, unscrupulous lenders made variable
interest loans with initially low interest rates to unsuspecting homeowners:
- The idea was to be able to collect more interest, when interest rates rose to their normal levels.
- Government saw nothing wrong with this fraudulent scheme at the time. It didn't affect tax revenues, so it was not
- But the schemes backfired.
- When the interest rates rose, most of these homeowners could not make the payments.
- Instead of more interest collections, they found themselves with uncollectable loans and foreclosed properties they
- Many people lost their homes.
- Because banks were trying to get rid of the homes they foreclosed on, the housing market had a price fall. Homes
lost value on the open market.
- Other people found their loans upside down. They owed more than their houses were now worth.
- This scheme finally caused the failure of 15 banks, and falling stock market prices.
- Disasters soak up the economy and raise prices - The following disasters caused prices
to rise and the economy to further falter:
- Hurricanes Katrina and Rita caused much damage to the gulf coast in 2005:
- There is no way that government could pay to replace everything. Volunteer efforts helped, but could not cope with
such widespread devastation.
- It didn't help that New Orleans was built below sea level, and depended on levees and electric pumps to keep it
dry. This was stupidity in government before the disaster.
- Fully one third of all US refineries were shut down, and one fifth of all of the oil refineries in the US were
damaged or destroyed by the hurricanes. This raised gasoline and fuel prices, as the supply of oil to the US was
severely curtailed. One fourth of the oil production and one fifth of natural gas production was stopped.
- The port of New Orleans was closed by the sunken ships in Lake Pontchartrain. Parts of it are still closed. New
Orleans was the only US port deep enough to take the supertankers. They had to unload supertankers into small tankers,
take the oil to other ports, and unload the oil onto trucks. This raises gasoline prices, because trucks are needed to
haul the crude oil to where the pipelines used to take it. Since all of the pipelines go to New Orleans, they couldn't
be used until the port reopened.
- Government made the damage worse by not letting people back into the affected areas to ventilate their walls to
remove moisture. Many houses that could have been saved were rotted to destruction, because this was not allowed.
- Midwest flooding, and the remains of Hurricane Ike, caused much damage in 2008:
- Several towns were completely shut down by flooding in Iowa, Illinois, Indiana, Ohio, and Kentucky. During those
floods, many people could not get to work, and many workplaces were closed. Highways and bridges were washed out.
- Power failures were rampant, and thousands of people had food spoil as a result.
- Because officials again closed off areas as "dangerous", people again could not get in to ventilate their walls.
Again, government caused unnecessary destruction of property to make things super-safe.
- Hurricane damage to oil platforms and refineries, and their electric power supplies, caused gasoline prices to
reach record highs.
- Foreign governments act to damage our economy. - Many foreign government are not our
friends, and acted to undermine our economy:
- OPEC is interested in only the desires of its own member nations:
- OPEC controls enough of the oil to be a monopoly. It should not be allowed to exist.
- When prices fall, OPEC nations vote to raise the price.
- Some Islamic member nations want the US economy to fail, so an Islamic government can take over.
- OPEC uses oil supplies and prices as threats to try to control US foreign policy.
- Afghanistan, Iraq, and several other Islamic nations funded Al Qaida, leading to the 9-11 attacks.
- China deliberately uses government funds to undercut our prices. But it doesn't help that overtaxation in this
country prices our products out of the world market.
- Venezuela nationalized oil production, and uses the money to fund Marxist nations.
There is a common element in this economic tragedy - Government:
- Government overreactions to the 9-11 attacks damaged many businesses, by overregulating them.
- Governments caused the economy to falter after the 9-11 attacks, by raising taxes to protect their own depleted
coffers at the expense of the American people.
- Government policies allowing landlords to buy up huge amounts of land cause housing prices to soar.
- Government failed to recognize the variable-rate mortgage scam perpetrated by unscrupulous lenders, because the
extra loans raised more tax revenue.
- Government made the natural disasters worse, by not letting people rescue their properties.
- Governments with too much power cause problems in other countries.
- Greedy governments raised taxes multiple times during the downturn and recession. This will keep the economy in
recession until those governments repent of their greedy ways and cut their high taxes.
The following are the only possible remedies to these problems:
- The powers of all governments must be reduced. The people must demand such reductions in power.
- Taxes must be constitutionally limited to a maximum of ten percent of any person's income, and so that no person
considered to be in poverty shall be taxed.
- Since all business taxes are paid by wage earners, businesses shall not be taxed.
- Governments must not overreact to events. The people must not demand such overreactions.
- Governments must not put themselves ahead of the people they serve.
- People must stop worshiping government.
- Landlords must not be allowed to buy up huge amounts of land. Each landlord should be required to live in the
building he leases out.
- Government must examine the effects of new financial products for fraud and economic effects.
- Government must not keep people from accessing their own properties after disasters.
- Governments must not be allowed to try to control the governments of other countries.
- The Keynesian model of the economy must be banned. It has never worked - not even once.
- Government must be last, not first.
Reduce the power of government!
Stupid Government Tricks