02/29 An Opinion On “GOP Balks at Taxes to Finance Jobs Plan”
Obama does not know how to recover the economy. His economic advisers are incompetence. At the moment, there is only one way to improve the economy, i.e. inject more money into the economy. This will in turn push up the GDP and employment law advice. At this stage, there are only a few means to create more money into the economy. They are (i) higher budget deficit and higher debt leverage by banks and individuals (ii) asset appreciation (house and stock) (iii) printing money, i.e. QE3 (iv) foreign investment and (v) policy to increase wealthy immigrants. The cause of the financial crisis is due to serious asset devaluation on housing and mortgage securities, money was evaporated from the economy. Therefore, the solution has to be injecting new money into the economy to replenish some of the loss. The distribution of wealth via tax will not create new money into the economy although better employment will increase GDP but the effect is quite minimal. Obama has to think of ways to create new money into the economy rather than merely shifting between the rich and the poor as it will not help the economy. Ultimately, the recovery of housing is the key as it will create substantial wealth into the economy. The other means is to encourage foreign investment, i.e. investment by emerging markets and tourism. However, improvement in housing is still the most viable means.