Mistakes of the 1970's, 1930's and Today

Excerpts from the July 22, 2009 issue of the Technical Trader Report
Author: Jon L. Johnson

I have talked plenty about how the US is repeating its sins of the past at least in terms of hamstringing the economy and American ingenuity and thus insuring a prolonged recession versus a quick recovery based on investment here in the US, spurred by incentives to spend and invest when there is no reason to do so. What has always made the US great, what has always made us the most vibrant and robust economy in the world, is our adherence to free enterprise principals and our steadfast belief in letting the private sector contract and conduct business without excessive government interference or regulation. When we stray from those principals we suffer, e.g. the 1970's and 1930's.

The US has always been the champion of those wanting to succeed and be a part of the country. We have always taken the best from everyone and rewarded them in return. The US went astray when it started turning to government to solve all of the problems or perceived problems in our country. You can trace most of the major governmental encroachments to crises, e.g. the Great Depression, the war on drugs, 9-11, the latest economic meltdown. There is absolutely nothing wrong with foreigners coming to the US, but the problem is that now we try to provide anyone and everyone, even to the exclusion of native citizens, free services gratis federal dollars that of course come from taxpayers.

We have fallen out of balance with the risk/reward equation. You don't have to risk anything to be rewarded. You can collect welfare, social security, Medicare (all of these programs are rife with fraud) without doing anything. When 55% of the people pay no income taxes and yet receive well in excess of half the federal benefits you have a definite problem with incentives. President Bush crowd how his tax plan would take more people off the tax rolls. That is EXACTLY THE WRONG THING TO DO. We ALL need a stake in the game, we all need to put some chips in the pot in order to take some chips. Now we have a large group of voters that pay no income taxes yet can swing elections and vote for more benefits from those that do pay the taxes.

Unfortunately that is going to get even more out of whack now with the new Administration and its policies that continue reducing those that pay taxes and putting more burden on those that produce the innovation and thus our economic expansion. If you want less of something, tax it more. We are giving more away without requiring toil to earn it and failing to reward those that foot the bill. In history that is a recipe for disaster, and we are brewing it.
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Amen bro!