Was raising the debt limit a victory for America or just the people who run our country? They literally bought more time for themselves. I remember reading an article about Nouriel Roubini who stated that the perfect economic storm is on the horizon and it will create a global slowdown.
Another perfect storm is brewing for the US economy. An increasing money supply with no real increase in production of new products or services. A rising debt problem with huge entitlement programs that politicians and the general public are unwilling to reduce. To stop this economic meltdown will be like trying to stop an avalanche from occurring. Our political leaders will have to tread very lightly and they will be forced to take drastic measures to reduce spending, selectively and surgically implementing them to minimize the damage, but there will be suffering.
The increase in the money supply without any real economic production such as producing a product or service is only causing more inflation and is a short term fix. QE2 already inflated prices and the Federal reserve is considering QE3. I don't know why they call it quantitative easing rather its effects are similar to counterfeiting. This strategy usually hurts the little guy like small businesses and the middle income wage earners and below.
Governments consider counterfeiting a crime because it is detrimental to their economy. The reason why counterfeiting is so bad is that the only person who actually benefits is the person who created the counterfeit money. It is interesting that once the bills get into the system no one really knows that they are moving these fake bills through the system. The fake money enters the system and people go on spending it like it was real money. Is it real or isn't it, that is the question? You go to the bank and deposit it and if no one can tell the difference the fake bills continue to be circulated. Now, is everyone who passed on the fake money guilty of stealing? It is like a trying to find the answer to a Zen koan. The problem with counterfeiting is that it increases the money supply and it causes inflation. Printing more money doesn't improve the economy and it doesn't create sustainable jobs. Its like injecting steroids into the system, it looks and feels stronger for a little while but at some point you'll have to get off of it or the long term effects will end up crippling the user.
The consequences of what the Federal Reserve is doing is similar to that of counterfeiting. The additional printed money will flood the system and increase prices again. If you have purchased anything recently I'm sure you have noticed the increase in prices on practically everything due to the huge influx of this printed money.
The debt problem cannot be resolved by printing more money. Our government, which means our congressional representatives must reduce expenses quickly, like any household or business would do in these trying times. The other problem is that our government does not produce revenue on its own, it takes it from each one of us. If our incomes are shrinking then they cannot increase revenues to sustain an increasing budget without asking more from each one of us.
Still, I believe that there are opportunities here in America and globally for those who have the spirit that brought the original settlers here to find a land of opportunity and to carve out a future and a hope for themselves, their neighbors, and their children. The heart of America is still beating strongly.
Thankfully we still live in the land of the free and home of the brave, we are able to seek out new opportunities and venture into the realm of becoming an entrepreneur. The solution for our weak economy is to create real products and services. The entrepreneurs who have the courage to take the challenge and the risk of starting a business will be the heroes who can move us out of this faltering economy.
Bizincubators - Inspiring and educating entrepreneurs.
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