Economy, government are broken, need fixes

Several problems persist making a return to U.S. prosperity problematic.

Fully two-thirds of GDP is consumer spending. To be robust, there has to be a fully employed work force. But it is tragic what has happened to America's workers - downsized, right sized, outsources, unemployed, underemployed and de-unionized. Thus, workers' purchasing power has been eroded.

Another problem stems from the Federal Reserve pumping trillions of dollars into the economy via new lending or credit facilities. Eventually these lending facilities will be closed. But if they are closed too soon, this could cause another recession. Or, closing the facilities too late could cause serious inflation. Timing is everything.

A house of cards still exists for some parts of our financial sector. For example, the dollar continues to fall against major foreign currencies. Eventually, foreign holders of dollars may dump them because they are worth less and less. This would drive up inflation and interest rates in the U.S., worsening our real economy and deficit, causing even more dollar dumping.

Another problem involved unregulated derivative instruments. A recent PBS TV “Frontline” documentary on these instruments, a major cause of the 2008 meltdown, said they are still unregulated and total $450 trillion.

Our economic system is broken, Only the political system can fix it. But our political system is broken because of powerful special-interests campaign contributions, difficulty in achieving consensus because of extremism on both the left and the right, and huge federal budget deficits restricting policy options.

Do you hear a cracking sound?

Robert Anthony

Cedar Rapids