Sunday, May 8, 2011

Can the Twin Plagues of Inflation and Joblessness be Abated?

Recent unemployment figures show that we remain deep in recession despite the fake stock market gains due to the Federal Reserve propping it up. Money is being lent to Wall Street for non-productive activities to invest in bets on market trends and to speculate on and manipulate the price of oil and food commodities that increases the cost of gas and food to the consumer. At the same time, small businesses, the core of U.S. productive industry, cannot obtain credit to hire new employees or expand.

The government does not consider energy or food costs in reporting falsely that we’re experiencing little inflation. In fact, we’re experiencing significant inflation in the cost of energy and food because of Wall Street speculation and the Federal Reserve printing billions of dollars and creating trillions of dollars to give to big banking institutions to keep them afloat despite their being insolvent.

Many big businesses have a good reserve of cash on hand, but are reluctant to hire new employees or increase their productive activities because of uncertainty as to how new taxes and regulations will adversely affect their profitability. Many other businesses have been driven offshore by high taxes, stifling regulations and unreasonable Big Union demands, taking jobs offshore with them.

Another factor that’s increasing the cost of food is government subsidies for ethanol production from corn; a significant number of acres that used to be planted with food corn (both for humans and for animal feed), are now planted with different corn strains that are only useful for ethanol production. Government meddling in this respect has increased corn ethanol production with the adverse effect of decreasing food corn production driving higher prices for all foods that depend on corn (i.e. corn products, poultry, eggs, dairy, and other meats). The Obama Administration’s continued refusal to develop domestic fossil fuel energy resources prevents a lot of job creation that we could have in establishing energy independence from less than friendly foreign sources subject to regional turmoil.

To jumpstart our failing economy and put our people back to work, government must get out of the way with significant tax and regulation reform to bring jobs back to America, and the current imbalance of power between management and labor, in labor’s favor, promoted by government, must be reversed. Ethanol subsidies must be ended immediately, and an aggressive policy of allowing and encouraging domestic fossil fuel energy development must be undertaken.

Congressional audit and control of the Federal Reserve is essential to promote financing of productive small businesses instead of non-productive Wall Street gambling and to prevent further devaluation of the dollar by printing money and adding billions of dollars to the money supply. Each day that passes that we fail to take these first steps towards economic recovery prolongs the recession, ruins formerly successful businesses, stifles innovation, and incurs further catastrophic losses for individuals, both in terms of assets like homes and retirement, and in their personal lives.

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