The two main reasons why our economy is doomed for failure are:
1) America (and Americans) consumes more than it produces.
2) America (and Americans) borrows more than it saves.
Under these conditions, the American standard of living can only be sustained by selling off assets that we have accumulated in the past, and/or borrowing money with a promise to repay it in the future. Obviously this can not go on indefinitely, there will come a day of reckoning. This day may be postponed slightly with government bailouts. But bailouts will only exacerbate the problem because they will undermine the foundation of our capitalist system. Also, the demand for continuing government bailouts will become insatiable. Bailouts will lead to the eventual insolvency of the federal government.
The only way for us to build a sustainable economy, that will come back healthy and strong, is to produce more, consume less, save more and borrow less. Politicians and citizens are unwilling to face this undeniable hard truth. We must manufacture more, import less, consume less, borrow less and save more. This will mean higher consumer prices, higher interest rates, lower wages and less amenities for most Americans in the foreseeable future. We must also become energy independent, by drilling for more oil, building more nuclear power plants and through technological innovation. This will mean higher energy costs in the short term.
If we do not collectively make these sacrifices, the results will be devastating.This strong medicine will stabilize our current economic woes and build a stronger and more prosperous American future.This is the only responsible way to insure economic stability and the future prosperity of America.
However, politicians on both sides of the isle, are calling for the exact opposite. They are lowering interest rates, which discourage savings and encourages borrowing. They are encouraging consumers to borrow more and spend more, by making consumer credit more widely available. The government is borrowing trillions of dollars, through huge federal budget deficits, to finance "economic stimulus packages", bailouts and ever-growing government programs. Federal bailouts will reward mismanaged, corrupt and unprofitable corporations. Bailouts also tempt businesses and government officials with corruption. Bailouts also stifle the growth of healthy, profitable companies, because they are competing at a disadvantage with government subsidized companies, who are crowding them out of the market.
The government is also signing "free trade agreements", rather than putting tariffs on imports. This motivates us to buy cheaper goods from overseas, rather than producing more goods here. Often American companies can not compete with foreign companies. Foreign companies often do not have the same high environmental standards, safety standards, labor standards and high taxes that American companies face. It is unfair to have American companies compete with foreign companies without tariffs to level the playing field. Without tariffs, America's manufacturing base will continue to erode. We must produce as much as we consume in order to sustain our economy in an unstable world economy and for reasons of national security.
The American "standard of living " is unsustainable under the current conditions. Rather than accepting this "truth" and making appropriate sacrifices, government is mortgaging America's future, in order to buy us a little more time of "living beyond our means".
A fitting analogy would be, the prospect of surgery and subsequent chemotherapy for a cancer patient. Surgery and chemotherapy will ensure pain and suffering in the short term, but the patient will have an excellent chance of recovery. Postponing the surgical option, and improving the patients "quality of life" with painkillers, will certainly insure the patients death. If, we as a nation, do not choose the more painful option in the short term, we face almost certain catastrophic economic failure and possibly the end of America as we know it.