Solving the Fundamental Problem
The stock market has been moving up and down with new veracity over the last few months and that’s a major security issue for the U.S. For a long time, U.S. properties and our trusted dollar have been seen as a good investment to governments and individuals alike around the world. Among other attributes, it was a reasonably safe bet that was much less likely to see the type of volatility often endemic to emerging markets. But what we’ve seen over the past few months is a dollar in almost constant decline and a stock market that moves in fast and furious ways.
One might think that the volatility in the market is entirely natural and there’s little U.S. policy can do about it. I’d beg to disagree. Some volatility is inevitable as markets correct to new and unexpected information. But other volatility is the result of economic problems that our government has not even tried to help solve. After a lot of talk, there has been almost no policy change to try to help those with sub-prime mortgages who risk losing their homes or to create greater transparency to reassure current investors that their money is in safe hands. Instead, we have had a policy where the government tries to make it cheaper to buy into the market but does not attempt to change the market fundamentals. So, Ben Bernake drops interest rates and the market is more attractive in the short-term because money is relatively cheaper to invest, but there is no fundamental change to address the root cause of the issue. The U.S. needs to get back to a sound economic policy as a matter of national security. If we do not, we will soon see international investors pulling their money out of our country and we will lose one of the competitive advantages that has been at the heart of our success as a country since at least 1945.
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