Will Lower Fed Rates Make Any Real Difference to the Economy?
On Tuesday the Federal Reserve Bank announced that it will lower the Fed Funds Rate to between 0% and 0.25%. This is the lowest rate in the history of the Federal Reserve Bank and as close to free money as the nation’s central bank will likely ever get. The stated hope with this latest cut is that it will encourage lenders to begin lending again and begin to help business begin to hire workers so that the economy will turn around.
With this latest move the Federal Reserve has basically thrown caution to the wind and thrown the “Hail Mary” pass of lending in the hope of scoring a last minute touchdown to avoid slipping from recession into depression. With every recent attempt to stimulate the economy having failed to turn things around the Federal Reserve is taking one of the only steps it can take to try to resurrect the economy from eight years of failed policies. The central bank has cut the key lending rate more than 4% in the eighteen months with little to no success in stimulating real economic growth.
The looming question remaining is will this latest cut do anything or will it be the last gasp of the dying economy before America plunges headlong into a depression similar to the Great Depression of the 1930’s? The economic policies leading up to now have been eerily similar to those of the 1920’s where regulation was relaxed and the wealthy were left to police themselves leading to the breakdown of the economic markets and eventually the larger economy. The Roaring 20’s seem a bit similar to the .com boom of the 90’s and when you look at the mergers and buyouts that took place in the 1920’s and the same trends in the 1990’s and early 2000’s it gives you pause. Could we have been so foolish as to actually repeat the mistakes that led to the Great Depression? It took World War Two to get us out of that depression so one has to wonder what it might take to get us out of this one if it comes to pass.
On the upside, we have an incoming administration very focused on the solutions to the pressing issues of our day. Much like Franklin Roosevelt, Barack Obama understands that only by getting Americans working and reigning in the greed on Wall Street will we be able to avoid the deep depression facing us. He is focused on repairing our infrastructure and creating new technologies to re-power America without the use of fossil fuels. It is clear that the incoming administration is committed to re-energizing the American workforce and instituting bottom-up economics as opposed to the insane top down model that got us into this mess to begin with.
To rebuild our economy we will need to create jobs and to create jobs we will need to do a bit of wealth redistribution. Our economy is top heavy and needs to be balanced in order to keep money flowing through it. The rich will have to spend and government will have to tax in order to take money from sitting in vaults to running through our businesses and families. The rich hoard. That’s how they get rich. Hoarding leads to others being left without. Sometimes it comes time to break open the big piggy banks for the good of the country. While it’s fine for the Fed to cut rates, Congress needs to follow that with mandates forcing the wealthy to give back to those who made them wealthy to begin with.
My proposal would be simple; Congress should levy a one-time assets assessment for every American worth more than fifty million dollars. Their assets worldwide would have to be accounted for and they would have to pay a one-time “National Interest Assessment” of 5% of their net worth. For the bottom tier of people worth fifty million dollars, their assessment would amount to two and a half million. While that seems like a lot, it is one twentieth of their worth and will more than likely easily be replaced over a few years in interest income on their assets alone. For their 5% America would gain jobs and less debt for our children to bear in the future and a future of greater economic stability.
To those who want to pick this idea apart, it is in fact a redistribution of wealth that I am proposing. I unapologetically say that it is far past time for it to happen. The rich have gotten so from the labors of the rest of us. It is time they gave something substantive back and that they feel some of the sacrifice needed to preserve our freedom. Those who have benefited the most from the prosperity of America need to stand tall in this time of need and do what they can do to get us through it. We have all been called upon to sacrifice for the good of the nation. We the workers can give our labors but the wealthy also must give what they have to offer and what they have is money. Fair is fair and sacrifice should come from all levels. I’m not talking about sacrificing a Bentley to buy American; I’m talking about real, painful sacrifice that shows you really care about America and our people. 5% of a rich person’s wealth will not break them but it very well might make the difference between heated or unheated schools for children who can’t afford the private academies the rich send their children off to attend.
Troy Wilson-Ripsom - Staff Writer| Give your feedback on this article. | Click icon to Digg this article
