Da Economy is 'On the Grow'

Today a report came out that said 3rd quarter U.S. GDP grew at a decent 3.5% annualized pace. I guess the recession is over. There is no doubt that Obama will stand up and give a speech declaring that his government spending policies are responsible. He has pumped almost $200B of the $800B stimulus into the economy and, more significantly, the Fed has basically flooded the economy with about $2Trillion dollars!

Unfortunately, the recession is actually a long way from over. How an economy grows is actually surprisingly easy to understand. The bottom line is that people invest money in a product or service that people want to buy. As more people buy the goodie, more people are needed to help supply it. This creates jobs, gives people a goodie they like, and is repeated millions of times for companies both big and small. The majority are in small companies.

Despite all the government spending and all the fascinating economic theories espoused by people like Paul Krugman, the fact is the basic facts don't change. Smart people can tinker with money policies, microeconomic tax policies to influence individual behavior via incentives, or just plain give people Obama guvt money. All these things are short term. The plain fact is that unless people are doing what was described in the previous paragraph these tinky dink academic economic theorists will not get us out a recession.

People always have a vested interest in making money and are naturally inclined to want to take risks and start or enhance a business. But there are limits to how much risk they will take when they perceive that government doesn't really have their interests in mind or understand what they face when they embark on a business venture. Current government policy is incoherent. It heaps new taxes on people and has the added disadvantage of being big and confusing because it is not yet transparent. Since business people have to plan long term, it is delaying a serious American economic recovery.

So celebrate the good news. America: You grew. Don't worry about the money you borrowed or how you will pay it back. For tomorrow will be dealt with tomorrow. In the long run we're all dead anyway. Carpe Diem!