May the force be with you, because what the Feds just did ISN’T

Is the economy improving? Well, that’s a question we should be asking everyday Americans. Sure, gas prices are down, but while that happens, many small businesses in the oil and gas sector have gone under. Overall, it does appear to be a great thing for Americans to get that relief at the pumps. But beyond that, what’s happening with the near 93 million Americans who’ve completely dropped out of the workforce? What is the true state of the American economy when we consider the workforce participation rate?

Well, based on the actions of the U.S. Federal Reserve Chairman, Janet Yellen, it appears we’re climbing out of a very deep hole.

As reported by Fox Business News, “After seven years of rock-bottom interest rates held low to stanch the bleeding from the worst financial crisis since the Great Depression, and after months of unusually public hand-wringing over the precise timing of liftoff, the Federal Reserve on Wednesday approved a rate hike intended to start easing U.S. monetary policy back to normal.

The historic decision marks the final break from an era of unprecedented interventionist monetary policy initiated in the wake of the 2008 financial crisis. The policy-setting Federal Open Market Committee voted unanimously to raise rates by 0.25% to a range of 0.25%-0.50%, not a whole lot but enough to test the still-weakened U.S. economy’s ability to absorb the higher borrowing costs that will follow the increase.

Citing healthy momentum in the U.S. labor markets and confidence that inflation is starting to climb upward toward the Fed’s 2% target, the Fed pulled the trigger on the first rate hike in nearly a decade.

“The Committee judges that there has been considerable improvement in labor market conditions this year, and it is reasonably confident that inflation will rise over the medium term to its 2% objective,” the FOMC said in its statement released at the conclusion of Wednesday’s meeting.”

Nope, I am not an economist but I do have just enough common sense to understand that the policy known as “quantitative easing” must come to an end. We cannot continue down the path of printing money in order to purchase our own debt and keeping financial institution borrowing interest rates artificially low.

At some point and time America MUST return to a free enterprise/free market economy. The Federal Reserve and its monetary policy manipulations cannot perpetually prop up an economy made unhealthy by tax, regulatory, and overall fiscal policies that are the antithesis to economic growth.

Those who are touting a two percent annual GDP growth can’t force us into believing it’s the new normal – it’s anemic to say the least. And what must truly concern us is the debt clock ticking ever upward. Furthermore, if we don’t increase our GDP growth, well, we shall surely be upside down in our GDP-debt ratio — which if you consider our unfunded liabilities, we ‘re already there.

I for one — perhaps you’d like to know as well — want to know how much money has been printed over the past seven years used to purchase American debt? If you didn’t know, the biggest holder of our debt is not China but our own Fed.

So, sure, this is the news du jour and many are slapping high fives and taking victory laps, but is this yet another case of smoke and mirrors? We were running blind into the last financial crisis surrounding the mortgage industry relating to mortgage backed securities, and the surprise crisis advanced by government adventurism into that private sector industry. Many folks were giddy and chest thumping about minority home ownership — that didn’t end up too well, did it?

If we want true economic growth, let’s turn to the captains of industry — and I speak not of crony capitalism and government venture capitalism — but rather tax and regulatory policies that indicate America is open for business.

We need to get our fellow countrymen and women back to work. We need to reduce the growth of the dependency society in America. Our tax structure should promote main street expansion growth and hiring.

This can no longer be about government spending and growth of the behemoth that has become Washington D.C. Unfortunately what has happened in America is that individuals and certain corporations have become addicted to the crack cocaine of government largesse and welfare. The underlying question to the Fed one-quarter-point interest rate hike is will the addict react violently to its source being constrained? That remains to be seen. Of course it’s good we’re not doing this “cold turkey,” but it appears to be a measured withdrawal.

Now, I know many of you think this really isn’t that important. But remember what the former Chairman of the Joint Chiefs of Staff, Admiral Mike Mullen, once stated: “our greatest national security threat is our debt.”

Kudos to Senator Rand Paul (R-KY) for expressing that during the Tuesday evening GOP debate. We have to get our economy back running at a 6 to 7 percent annual GDP growth rate. This 2 percent nonsense is not what our American economy needs.

What is necessary is a fiscally conservative leader who won’t look to government “investments” as the means to restore our economy. The American entrepreneur, not the Federal Reserve chief, is the person who can prop up this economy, but they need a pro-growth tax and regulatory policy agenda. The news that the Fed raised interest rates is a good first step, but a real indicator of strong economic growth would have been an interest rate increase of one to two percent.

An increase like that would demonstrate we’re heading in a positive direction — not the slow creep. Just remember where President Reagan was at this time in his presidency with annual GDP growth — seems like a long, long time ago in a galaxy far, far away…

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