The US economy is languishing, weak and struggling to recover. What is needed is economic growth. The Sequester is a bunch of spending cuts that will have a negative impact on the economy. It is not an enormous disaster. What it should be is a reallocation of spending to programs that will stimulate the economy.
Scottsdale, AZ -- (SBWIRE) -- 02/25/2013 -- At the present time our economy is weak to the point of almost a depression. Politicians in Washington and the news anchors on TV talk about the out of balance budget and the national debt as if they are critical problems. They are not and cannot be fixed by spending cuts. The answer is that they can not be corrected without economic growth. The first tool to achieve economic growth is by Government spending programs that will create jobs, increase middle class income and increase middle class spending. The second tool to achieve growth is to dramatically increase the marginal tax on the highest income earners. An increased marginal tax rate is not just a revenue generator. It will change the way people think about their tax planning and force them to put their money into active and productive investments. Investments that expand business and create jobs.
We have been trying to use monetary policy to correct the ills of our economy. The FED has created enormous liquidity and has held down interest costs. Unfortunately this has stopped working as it is supposed to because our economy is in a “liquidity trap”. This also took place in the 1930s. Monetary policy alone cannot fix the economy. The excess liquidity has been flowing into the stock market because it has few other places to go. That does not create jobs and help the economy.
We can expect that the sequester will happen. Then there will be some adjustment to both spending allocations and to taxes. What will not happen is a substantial change that will have a real and positive impact on economic growth. It will be another kick the can down the road. The next stop on the parade of government by crisis will be the debt ceiling. While this is going on nominal unemployment continues in the high 7% range. The FED has told us that they will continue a policy of high liquidity and low-interest rates until unemployment falls to 6.5%. That will take a long time without any real change in government programs and tax policy to stimulate economic growth.
Take advantage of the low-interest rate world of today. Refinance any properties that you can. There will be a change in the future, either at the ballot box, as the Europeans are learning, or by the politicians realizing that they are out of touch with the people and the real world of the economy.
About Victor Weintraub
Victor Weintraub, a noted economist and author, is president of First Charter Financial Corporation a leading independent mortgage company. First Charter Financial conducts business on a nation wide basis and arranges financing for commercial properties throughout the US. The projects that are handled include office, retail, multifamily, hospitality and specialty properties. Loans amounts range from a minimum of one million dollars up to as large as 100 million dollars. First Charter Financial maintains relationships with large and small insurance companies, retirement and investment funds, regional, national and multinational banks and is very active with capital markets funding sources. Contact First Charter Financial with all of your commercial mortgage needs. Email firstname.lastname@example.org Telephone(480)970 0990