Raymond Richman       -       Jesse Richman       -       Howard Richman

 Richmans' Trade and Taxes Blog

Morici lays out the causes of America's economic stagnation
Howard Richman, 7/25/2013

In a pithy paragraph from his July 16 commentary (Easy money is the opiate of the American economy), U. of Maryland economist Peter Morici nailed the causes of the great depression which, unaddressed, are causing America's current economic stagnation. The causes are:

1. Trade Deficits. "[A] growing trade deficit with China that saps demand for U.S. goods and destroys jobs;"

2. Wasting Money on Unprofitable Energy. "[D]ysfunctional federal policies that invest in bogus alternative energy schemes and limit drilling for oil offshore;"

3. Growing Business Regulation. "[B]urdensome business regulations that raise the cost of new projects;"

4. Bank Regulation that Hurts the Smaller Banks who lend to Small Businesses. "[B]ank reforms that enrich the Wall Street Banks, while starving America's biggest jobs creators—small businesses—of credit."

Morici's main point in the article is that the monetary growth "solution" being tried by the Fed cannot go on forever. He predicts eventual disaster:

With growth slowing, the Fed may have to pump even more cash into the economy with diminishing results. Sooner or later the recovery could falter, and much like Europe, a few pockets will prosper but much of the rest of the country, like Spain and Italy, will sink into double-digit unemployment.

The causes of the recession and economic stagnation are clear to Morici and to us. Unfortunately, those with power in Washington still appear to be clueless.

Comment by M, 8/2/2013:

One cause is missing from the list. A broken political system.

Those in Washington are not clueless, it's just an act. Like the Caveman character from SNL.."Ladies and gentlemen of the City Council, I'm just a caveman... Your world frightens and confuses me. When I see your tall buildings and flashing neon signs...."  

The current system appears to work very well for the Federal Government, The Federal Reserve, and multi-national corporations.