U.S. Has to Solve Stagflation Problem

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Published October 23, 2012

| FOXBusiness

After months and months of speeches, posturing, promises and fear tactics, the entire election comes down to one thing: Who can fix the stagflation in the United States? Solving this will not only free up our economy but also the rest of the world's economic power. 

Stagflation is a very difficult economic situation that comprises three components: high unemployment, slow economic growth and rising prices, especially in food and energy. (The CPI, which the government calculates and publishes, does not even come close to accurately reflecting what the cost of living year-to-year increases are.) 

Stagflation is so difficult to cure because the solution for one component of it usually accelerates the negative implications of the others. Text books will tell you there are two ways to solve stagflation.

One way is to increase deficit spending. However, given the size of  our annual deficit and increasing national debt, this would be financial suicide for the country. 

The only tool we have left is to follow the other solution, which is an across-the-board tax cut. Even my economic and investment friends from the left understand and agree with this assessment. They remember that the last time we had stagflation, under President Carter, the remedy of tax reduction across the board worked. 

To some it sounds counter-intuitive -- increase tax revenue through lower tax rates -- but it has worked in the past and regardless of which side of the aisle you're on, you must understand we have nothing else to use to fix this. Printing of money through monetary policy  is raising prices for you in just about everything,  but is doing nothing to stimulate job growth and it is doing nothing to stimulate this stagnant and slowing economy. 

We need to pivot and change the approach. This isn't written with a political motivation. It is a simple fact that we only have one approach left. Let's use it.

The entire election comes down to the economy and who can solve stagflation to create revenue to fund programs desired by both sides, reduce deficit and reduce our debt. We have heard over and over that this is the most important election of our time. It is. A healthy United States fosters growth and healthy economies around the world. A stagnant U.S. economy will continue to paralyze the rest of the world. 

The economies of China, Germany and Japan combined equal the size of ours, and as goes our economy so goes the rest of the world. As people all around the globe watch our election, vote for the person and party you think has the plan to fix stagflation quickly before rigor mortise sets in permanently.

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http://www.foxbusiness.com/economy/2012/10/23/us-has-to-solve-stagflation-problem/