Future shocking?

It amazes me that we are not hearing any straight talk about what lies ahead, as if things could somehow go on as they have before. Even though I have only a small education in economics, it seems obvious to me that the United States is going to have a huge amount of debt to pay off. This can only be done by working together to create things of lasting value which can be used by large numbers of people. Infrastructure. Trade cannot pay off debt, because nothing of lasting value is created in trade.

Consumer spending is based almost entirely upon trade, so consumer spending will have to decline. But how could consumer spending continue at previous levels if people are all broke? Something is going to have to replace consumer spending as the engine of the economy, and it will have to be big. Instead of building roads, though, maybe we should consider some new kinds of infrastructure. Like fiber optic cables to every home, and a combination data terminal/videophone in every house. A national high speed rail network. Upgrade the electric grid, and run transmission lines to areas where wind is plentiful. Insulate every structure in the nation. Not just spending money, but actually increasing our efficiency as a nation.

Demand for resources can easily outstrip supply if developing countries begin large-scale consumption. The resulting supply-side shocks cripple the economy, pushing up inflation at the same time that wages become stagnant. Greed overwhelms the markets, and a herd mentality emerges, where any profitable strategy is immediately copied, over and over again. One sub-prime mortgage is not a problem. Several million of them are. So markets will have to be guided into spending a portion of their capital on long-term projects, which will dampen the volatility in the short term, while providing guidance for investors as to where long-term growth will be.

Our future economic expansion must be based in increasing our net worth, not financial manipulations of value. Paying for this increase will mean working longer hours, so that the tax burden is spread over more earnings. The payment of cash dividends has got to be discouraged, so that corporations can invest their earnings into new means of production, training, and research. Military spending has got to be reduced, as that is money that disappears from our economy after one pass through it. Spending on space exploration needs to be increased, because it generates new wealth at a rate nearly unequaled, while engaging the high-tech military-industrial complex.

Saving has got to be encouraged, so that the government will have access to money to use for these programs. Payroll accepted in the form of U.S. savings bonds should be tax free, and the payroll value calculated in immediate redemption value, not the face value at maturity. Interest on savings accounts should be tax free. We are going to have to stop relying on foreign countries to carry our debt, because we are making our money worthless. Only by working together, and sharing the sacrifices, can we have any hope of coming out of this economic meltdown.

Tags: consumer spending, credit crisis, debt, economic crisis, economic downturn, financial crisis, globalization, infrastructure, public works, recession, spending, taxes