By Charles Biderman
What I heard from the President’s State of the Union address was that he believes that the US government can successfully and efficiently and effectively solve our problems. What President Obama and his backers do not seem to understand is that big government is, in fact, the problem, not the solution.
So in his address he told us that the his government can save the climate, fix inequality of income and opportunity, take care of all of our health needs and ultimately guarantee that happy days will be here again. That is, if he were only given the power to do all these things.
And he is not alone in this mistaken belief that government can actually do all that. After all, he was elected to a second term. The problem is it is hard to find one service the federal government provides that is effective, other then writing checks. We have not won the federal wars on poverty, or drugs, nor overseas wars in Iraq, and Afghanistan.
So although governments have rarely successfully provided services, we have a government committed to doing just that. Moreover, millions of Americans obviously think governments can do what they never have done before because they keep electing officials who promise to provide even more services.
Now for the record, I am not saying that Democrats are bad and Republicans are good. No, I am saying that both Democrats and Republicans are not equipped to solve any of our problems because in essence they are the problem.
The problem is that the elected representatives of our representative form of government require huge amounts of campaign contributions to get reelected. And they get the money from special interests, who in essence, own the representatives who’s jobs they have paid for.
So to me, the specials interests of the Republicans are just as bad as the special interests of the Democrats. Neither party’s policies are capable of solving our problems.
But since January 1, investors are pouring billions into the markets in the mistaken belief that the “fake” money created by central banks is just as good as previously existing money, and the markets will keep soaring. But for how long?
Until recently most investors have been too frightened to invest in stocks. But now greed is replacing fear because investors believe that the Federal Reserve can successfully keep the markets from dropping.
This is magical thinking. At some point the markets will have an “aha” moment and stop allowing central banks to use newly created money with which to pay government bills. When that happens the markets will crash.
Meanwhile, it seems that contingency plans are being created by those who think governments deserve as much of the economy’s assets as necessary to take full care of us. This past Sunday’s New York Times had an article postulating a source of government funds would be to tax not just income but also appreciation of assets. If stocks go up by $10 trillion, doesn’t the government deserve a nice cut of that? After all it created that $10 trillion gain.
Scary? It is to me.
Tags: america Barack Obama Biderman Economy government Investing state of the union Stock Market TrimTabs USA Wall Street