How To Rescue Our Economy.

I can tell you that yesterday’s GDP Report hit Wall Street like a ton of bricks. They were simply not expecting the magnitude of this economic decline.

Zero Hedge reports that 65 out of 69 Wall street economists surveyed expected that the nation’s economy grew last quarter. And on average they felt it grew by better than 1%.

Not a great number, but miles ahead of the 1.4% decline that turned out to be the case.

So if I were, to sum up just what the GDP Report told us: “It’s all in the goods.” you know the physical things that need to be manufactured. Tangible things.

Look around the room you’re in now. The computer or phone you are listening to. That’s a “good.” The chair you’re sitting in. Another good. The room you are in. Yep, a good. Everything in your physical space, that’s a “good.”

And bottom line. We simply don’t make them anymore. We, generally import them.

So of the six items that the Bureau of Economic analysis pointed to as slowing this economy. Three were directly attributable to goods.

First inventories went down. Primarily auto, which isn’t being built because of the semiconductor shortage. That’s a lack of goods.

Second, we aren’t making many goods here. And so we aren’t exporting goods. A trend that’s been years in the making.

And third, we are importing a higher number of goods. And imports in the GDP calculation subtract from our economic output.

Now there was also a reduction in Government spending, and that reduced GDP somewhat. And there was an increase in business and individual spending. But that was due primarily to increases in prices driven by inflation.

To sum it up, in a sentence. This economy is in deep Kimchi. And it’s all because we are not producing physical products. What economists call “goods.”

And let’s be blunt here. We are in this situation because a sizable portion of the American population just doesn’t like manufacturing. They think it’s dirty, smelly, and just pollutes. Politically, we’ve gone far beyond the point where they want clean manufacturing plants. And we’ve arrived at the point that many just don’t want manufacturing plants at all.

We’re the dilettante country, that wants someone else to provide us with the goods we use. The unfortunate consequence of all this is that we allow China to pollute their part of the world to a far greater extent than we would allow here at home.

If manufacturing would return to American shores, it would be the single greatest thing we could do to prevent environmental pollution.

Making our current situation so poignant is the fact that the steps to a better economy are all laid out in this GDP Report.

Reduction in inventories principally because of a lack of semiconductors for the Auto Industry. Solution: start building US-made semiconductors.

A few weeks ago Jamie Diamond, Chairman of JP Morgan Chase, suggested that we needed a new Marshall Plan to promote oil and gas production in the US. And thus curb one of the major contributors to inflation.

I think he’s exactly correct. But we need several Marshall Plans. One to start production on homegrown semiconductors would be another much-needed plan. One that would save our auto industry.

And that same approach could be used in all-out manufacturing. Bring back to these shores the production that we allowed to slip overseas.

Imagine, just for a moment, if Apple Computer and Nike, were the first two American companies to move to China. Imagine if Apple and Nike brought just a portion of their manufacturing back to the US.

In a stroke, it would employ literally thousands. And solve the supply chain problem in an instance.

Today this country’s economy is rudderless. Adrift on a sea of uncertainty. At the whims of other countries. Subject to a lack of goods, because China principally has locked down its ports.

It’s just the sort of challenge that America used to recognize and meet. The Marshall plan, after all, was the American initiative to rebuild Europe after World War II. When they faced just the same sort of economic issues. They had lost their factories in the War.

Today, we’ve lost our factories to overseas competition.

Why not initiate a Marshall Plan for 21st Century America?

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David Reavill

David Reavill

David Reavill writer + finance +iconoclast + hiker + Pennsylvania #valueside daily podcast + medium + meditate valueside.com/links