Friday, February 1, 2008

Jim McConoughey for Congress and the economy

At the start of this election cycle I was supporting Aaron Schock for US Congress from the Illinois 18th District, but after the way he handled a number of things and more importantly after talking with Jim McConoughey one on one I came to the conclusion that he is the best choice. He has a strong grasp on economics and economic policy which something that we need more of in Congress and he has the skills to be a strong leader. Schock might still have a bright future in front of him, but today should be belong to McConoughey and I hope everyone in the 18th district that reads this will vote him on Tuesday Feb. 5th

On the subject of the economy, there has been a lot of fear mongering in the media and for the most part it is wrong. Yes the financial markets have been very volatile the last month or so and that has been due to a number of things including the sub-prime problem, but a lot of it is due to the bad handling of the situation by the Federal Reserve System. The Federal Reserve System has not handled this well particularly with their surprise over night cut in the interest rates a few weeks ago, regardless of whether or not it was need, the Fed went about it in away that was going to cause problems in financial markets. Stock values are based by in large off expected future returns which in turn those expectations are largely based off what people thing the economy is going to do in the future, and a surprise closed door decision to cut interest rates like send a single that we enter a major economic downturn, even if we arent, which is the case this time.

The damage caused by the sub-prime problems to the large economy has been relative small and over time the economy will work the problems out relatively quickly. The bigger threat is the Fed will continue to follow a bad monetary policy and Washington will use this as an excuse to increase spending, particularly deficit spending, and increase the rate of inflation with out producing any economic or job growth, stagflation, and to under take an number of policies that will not have any real long term effect, tax rebates, while not fixing the real problems of the government that have harmed the economy, an inefficient tax system, government spending that is to high and continued deficit spending, doing this will go a lot father to help the economy.

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