President Barack Obama’s tax and spend policies are reversing the core principles that made America the most prosperous nation in the history of the world.
Our current recession has been difficult for many Americans. Currently, the gross national debt is over $13 trillion; with the Federal Reserve buying up more U.S. treasuries or debt; the total amount of debt will not be decreasing anytime soon.
Another reason that the U.S. economy is not showing few signs of recovery is that the U.S. Census has just reported that one in every seven Americans are currently in poverty—that is around 46.3 million Americans, a whopping 14.3 percent increase from the previous year. This is the highest level of Americans living in poverty since the 1960s. If tax credits, as well as food stamps are counted, an additional 7.8 million people would have to be added to that number. With this growing trend, it does not look like the “recovery” we hear about in the media is a reality. The trend is actually pointing towards a weaker economic climate, where more and more people will become dependent upon a government that is $13 trillion in debt.
The dollar is the world’s standard currency, and largest reserve holding. However, this will most likely change due to China and many other countries pushing for a new world reserve currency standard. To date, China is calling for a new currency to eventually replace the dollar as the world’s standard. China’s push to oust the dollar as the world’s currency reserve is being backed by nations such as Russia and other emerging markets that want a global economy that will be less dominated by the United States and other wealthy nations.
Another reason the dollar is falling is due to the federal deficit and trade deficit that are currently at historical highs. Studies have shown that when a nation’s trade deficit surpasses 5 percent of its gross domestic product, what will likely happen is that the value of its currency will fall somewhere between 20 percent and 40 percent. America’s trade deficit is around 5.7 percent of our gross domestic product. This, combined with our egregious national debt, means that our currency is bound to lose value in the future.
Our currency is also likely to lose value because the Obama administration wants a weaker dollar. Mr. Obama believes that a weaker dollar will make our products more competitive on the global stage. The president believes that weakening our dollar will lower the cost of U.S.-made products, and by doing that, the demand for made-in-America products will increase, causing our production to increase—and as a result, will rescue us from the current recession we are facing. This agenda needs to be stopped: Americans do not want their purchasing power to be inflated away.
Our currency will also lose value due to the increased spending by the U.S. government and the monetization of the U.S. debt. Currently, the federal government is trying to spend its way out of this recession. The government has been spending billions of dollars to rescue banks and stimulate the economy by having the Federal Reserve buy up U.S. treasuries at very low interest rates, which will result in increasing the amount of dollars being put into America’s monetary system. This is also known as Quantitative Easing. This is all happening while interest rates abroad are being kept at a much higher level.
In order to stop this trend from fully materializing, we need to change course, and change fast. When Lyndon B. Johnson became president he declared a war on poverty. Yet, poverty is winning. Since Mr. Johnson enacted the Great Society, the fundamentals of our economy have changed. Our country became great because we enacted policies that encouraged savings and punished overconsumption. Now, we are enacting policies of low interest rates, overconsumption, and excessive spending: our “buy now and pay tomorrow” mentality has driven our government and its citizens into massive amounts of debt that we will not ever be able to pay back.
In addition, there is a huge misconception that spending needs to be increased from citizens or government in order to grow an economy and that consumer savings hurt an economy. If that is true, than why do China and Singapore, whose savings rates are at 30 percent, have GDP growth rates at nine to 10 percent? Shouldn’t their GDP be stagnating because of the lack of spending?
Washington needs to get rid of the myth that spending is needed to grow an economy and that savings hurts an economy. What made this country an economic superpower was the fact that we enacted policies that encouraged people to save their money and punished them for overconsumption. If we abandon what made us great, and that is an economy based upon consumer savings, as well as production, America will simply cease to be an economic superpower.
Moreover, since the 1960s our country has passed many new regulations, and as a result, the entrepreneurial spirit that made us great is now fleeing to other nations. America does not need new laws; we need to repeal a good majority of our regulations. We must unleash the free market and the entrepreneurial spirit.
This is what made America great before, and it can make America great again—if the government would just let it.
-John Manfreda is a writer living in Bethesda, Maryland.
