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Strategies & Market Trends : John Pitera's Market Laboratory
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To: Jon Koplik who wrote (12673)10/13/2010 2:17:29 AM
From: Hawkmoon3 Recommendations  Read Replies (1) of 33421
 
This is my opinion as to what the Fed is missing.. The demand curve of the equation is slumping. With nearly 20% effective unemployment/underemployment, and the available jobs paying far less, consumers are defaulting and de-leveraging and refusing to take on my debt.

Debt is NOT necessarily a bad thing, so long as the money is utilized to make an even greater profit, or to invest in assets that appreciate at a greater percentage rate than the interest that is paid (margin investors do this all the time).

But if people are uncertain about their job situation, they aren't going to buy as much on credit. In fact, they aren't going to buy many non-essentials at all.

And the jobs that are being "created" by the Federal Government are "make work" projects that don't necessarily add to the economic pie, they just divide it and burden taxpayers with more national debt that future generations will have difficulty paying off.

Is there a solution? I still assert that the Federal Government has a role to play when the private sector doesn't want to take capital risk. But when the Feds create infrastructure or "Manhattan Projects", there has to be a long-term ROI involved that will re-energize economic productivity and create wealth, not just redistribute it.

And supporting the entrepreneurial and small business sectors are critically important because this is generally where new innovations and inventions are formed.

But there is clearly one thing this administration could do and that's to create self-sufficiency with regard to energy. But it needs to be done in an economically productive manner that serves our long-term needs. This alone would keep nearly $1 Trillion within our borders, paying our domestic workers, and not lining the pockets of foreigners.

Just my .02 worth.

Hawk
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