To get out of the hole, first stop digging

Today I want to point readers to this editorial in Investor’s Business Daily. It is a great synopsis of the current state of the US economy. Anybody who has had even a basic college course in “Macro Economy 101” knows that tax hikes hurt economic growth, tax cuts boost growth. It’s been proven time and time again. And yet this administration, with unemployment over 10%, continues to propose massive health-care tax hikes. Gold prices are shooting through the roof, and the dollar is collapsing, because federal deficits are soaring. A falling dollar brings on higher oil prices, which slows the economy further. The stimulus was a total failure, which anybody with a iota of finance understanding predicted.

Let’s take a look at a few charts. The first one compares the unemployment rate with the projections provided by the administration as it was lobbying for the 'stimulus' package:

This second graph is simply a graph of the unemployment rate over the last several years. The problem does not seem to be under control.

And the third graph is gold prices. Gold is viewed as a hedge on inflation and depreciating dollars.

The market certainly seems to be betting on things getting worse.

One of my favorite sayings is that elections have consequences. Too many people did not do their homework before going into the voting booth last year, and we are all paying for it now. It’s going to be a long 12 months to the 2010 election.

Author: Mark