Our Economy Has Been Doped

When I say "doped" I am referring to the kind of doping that goes on in sports. Athletes call the dope "performance enhancing" drugs.

Here is the analogy: The economy is the athlete, cheap credit and money are the performance enhancing drugs, and the FOMC at the Federal Reserve is the corrupt physician who keeps prescribing the dope.

The doping of our economy began with the creation of the Federal Reserve system in 1913. At first, it didn't take much dope to keep things running. At times, cooler heads prevailed and they kept the amount of dope in the system to a minimum to avoid side effects. Eventually though, addiction took hold, and they needed to add more and more dope to get the same high.

Natural economic downtrends became "problems" that could be fixed with a little more dope.

The new problem is that the dope isn't working anymore. The system is rejecting it. The FOMC's solution seems to be to up the dose.

Like a retired athlete suffering from crippling arthritis after years of stellar performance, our economy has entered a period of unavoidable decline.

It appears to many that excessive liquidity and cheap credit are helping. In fact, they are destroying value and slowly killing our economy.

The only way out of this mess is for our Government to become fiscally responsible and cut spending drastically. The budget must be balanced. Taxes should be held where they are for the time being and then, when the debt is paid down to a sustainable level, the whole tax system should be scrapped. We need a tax system supports savings and investment, not one that encourages debt and consumption.

All Federal subsidies in any form to financial institutions must be ended immediately. Only depositors should be made whole through FDIC when institutions fail, no money should go to "counterparties". Any TARP money that is left should be returned directly to the taxpayers, and divided equally among them in proportion to their prior year tax liability. If you had no tax liability in the years TARP was active, you should get nothing.

Our country can avoid so much pain and turmoil if we do this now, otherwise it will be a very painful bottom to endure.