Monday, July 7, 2014

Keeping the American Economy Number One

Keeping the American Economy Number One Lex Loeb Contributor Network . The United States is about to cede it's world dominant economy to any country overseas with the intellectual capital to take over. Watching this process unfold is a little horrifying if we want to keep the USA the number one economy on earth. Here are the best ways to keep American number one and also to stem the tide of the apparent economic slide. The first point is to be the most open on earth for free trade. Free trade is the best way to maximize productive output of all countries involved. The alternative is the old soviet union five year plan economic system where Soviet preference for home made production impoverished the country. Other examples are Cuba that freely trades with the rest of Latin America, Europe and Asia where free trade is non existent compared to in the US and their economy is a basket case. An other basket case economy is north Korea which freely trades with Russia and china. Compare north and south Korea based on relative nature of a free economy and there is no point in attempting to shut down direct free trade ever. Two countries with a common border with freer trade on one side of the border, say the US and Canada, Has shown conclusively that the country with more free trade is better off. than the other. Both the US and Canada have suffered relative to each other being more open or closed to free trade on occasions. Elimination of the Capital Gains Tax or it;'s severe limitation to make the US as competitive as the countries with the lowest capital gains taxes is required. Open the US borders to the worlds' best and brightest and richest requires that the US have the safest banks and investment services. The US should welcome anyone to attempt to become a us resident and eventually a citizen who has large amounts of money to bring and invest here rewarding them with the lowest possible taxes. The US must open the borders for anyone with an advanced degree in science and math who can find work here. The borders should also be open to temporary guest laborers to allow The high wage US economy the labor it needs to expand when it is necessary. Mexican labor could have helped rebuilt New Orleans in half the time after Katrina and stretched sparse dollars for those repairs. The US needs the most favorable tax rates on earth to attract foreign investment dollars because it is better for funds to be invested here. The US should not tax the health care providers if they want low heath care costs, Government needs to make choices about what it;'s priorities are and not spend more than we can afford by printing new money. All loans should be based on real collateral and unsecured loans like those for credit cards should be able to garnish wages so we don't ever have another banking collapse the the one of 2008. The US Military defense department should look to tax foreign countries where the US offers protection services. The Market should decide what energy resources are utilized to power the country so we don't end up with silly systems that have an unsustainable cost basis. The US should import all the energy resources it can get from overseas if they cost less than producing them here. That is part of the free trade advantage! Americans should not be taxed for a 700 billion dollar out of thin air bail out of banks but should instead have their taxes lowered, even to zero, to allow everyone in the country a reason to work harder and to have money left over to pay off their debts directly. A lot of borrowing of funds goes on in the financial system in the US to counteract the effects of inflation. This is a waste. Keeping the US Dollar strong and stable is fine. Running big trade deficits is not a bad thing unless the US tries to renig on the debt which is the basic cause of the catastrophic bank failures worldwide. The trade deficit only meant that foreigners were holding US certificates of debt ownership earning an interest rate that hardly kept up with inflation. The failures of the US economy in 2008 was not because of a free relatively unregulated market but because of weird outgrowths of the market in attempting to counter act inflation. The housing bubble was predicated on long term inflation of values. The whole idea that homes were great investments came out of the fact there had been a combination of inflation and appreciation over the years. Collateral should be a bigger requirement for getting loans and the idea that someone giving a mortgage to a bank should just be able to walk away from the loan at any moment they decide to stop playing should be stopped or at least their down payment should be sufficient enough to prevent the bank from taking an unsustainable loss on foreclosure. Banks that take homes as foreclosure should insist on at least a 20 percent down payment by the mortgage holder and the banks should have a department where they can go in clean and fix up a house they get back in foreclosure and put on the market for sale at a market price or allow to be rented out for income. Banks should make calculations where the rent if foreclosed on of the homes they loan money should give them at least a break even position to protect their capital and homes foreclosed on should go on their books as a productive asset when rented . Nothing so simple will be proposed by the major candidates, both of whom adore the super money machine that the US tax system is. less than 2 out 100 Americans would notice most us federal government agencies shut down for lack of funding and the 2 percent that would are the ones who formerly worked at those agencies. On the other hand shutting down entitlement programs, everyone notices. If any entitlement can be replaced with a major tax cut that is the best way to proceed in making a trade off. It is better that everything be tax advantaged. The worst thing to do is have programs that target problem areas instead of rewarding the best performing areas of the economy. There is no reason that any economy can not improve its growth at the highest rates seen in any emerging economy where double digit rates are observed. The US economy can grow at rates over ten percent per year and compound those growth rates if the tax conditions foster unlimited economic activity. . Close

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