The Economy

There is almost no good economic news these days. Apparently, the only thing people are spending more money on are dollar value meals at Mikey D's.

The economy only does well when money is being spent and it can only come from three sources: consumers, businesses or governments. With property values down and consumers in debt, it's hard to imagine consumer spending picking up anytime soon, in fact, it may continue to contract. Business spending, typically, is predicated on demand and without demand from the consumer sector, business spending will be stagnant without some sort of outside stimulus. That leaves the government. The US has run up a huge deficit over the part eight years with much of it thrown into the money pit called Iraq. And, the profligate spending has been compounded by the Bush tax cuts.

One problem with government accounting is that there is no distinction made between operating expenditures and capital expenditures. If a corporation invests in a large piece of equipment, for accounting purposes, the cost of that equipment is spread out over many years; typically, the useful life of the equipment.

If we looked at government spending the same way and the government were to invest, in say, new roads, bridges, a new power grid, alternative energy development, these would all be investments that would have long useful lives. It half-a-trillion dollars were to be invested, it would make more sense for us to view this as an expense spread out over 15 or 20 years rather than adding that much money to our deficit in a single year.

The treasury should bring back long term bonds to finance the rebuilding of our infrastructure and to get us on the road to energy independence. This would also go a long way to rebooting the economy and strengthening our country at the same time.