The ONLY Real Solution

Discussion in 'Economics' started by PAPA ROACH, Jan 21, 2008.

  1. I keep reading solutions for this mess coming from so many different people; lower rates now, raise rates, buy this, support this, give rebates, etc. Even Cramer has it wrong with his suggested government buyout of the bond insurers. This is real simple folks, try to follow me here. Ready?


    If you can all grasp that one seemingly missed fact by so many on Wall Street, then you're ahead of the curve. It is mind boggling that so many experts cannot come to grips with such a simple concept. It is elementary mathmatics, high multi-year inflation coupled with baseline per capita income equals high personal debt growth.

    So the solution? Real simple. Pay you're employee's. Forget a one-time rebate check, the commoner will probably blow that at a titty bar Friday night. American companies are sitting on all time record cash reserves on the balance sheets. Since these companies are dependent on the consumer, they should be real interested in the health of the consumer. A share buyback program does not help the consumer, an acquisition of a competeter does not help the consumer, yet this is how these companies have been spending that cash. In fact, the M&A activity leads to further unemployment, excacerbating the problem.

    First, the government needs to change the corporate tax code for 2 years initially, with a hefty tax on cash and cash equivalents. This would incentivise employee bonus payouts OR investment, either way creating cashflow across the economy and putting more money in the hands of the consumer. One more time, PAY YOU'RE EMPLOYEES, it will be the best investment for you're company in the long run.

    Secondly, as much as I hate to agree with some of you, we need to inflate the hell out of this debt. Carry some high inflation for the next 2 years in step with employee raises/bonuses. A one-two punch if you will.

    Bottom line, if income doesn't start to rapidy accelerate, there is nothing that the fed can do to stop a major prolonged recession from taking hold. The consumer IS the economy, not the balance sheet.