MY FORMULA FOR FINANCIAL SUCCESS
   
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2008-09-22

It is almost a forgone conclusion for both the Democratic and Republican parties that free markets, smaller government and individual responsibility have failed. Massive, new government programs, funded with fistfuls of freshly printed debt-based money, will keep us great.

I would argue that type of attitude is a guaranteed formula for a decline in America. Government in its current condition has failed.

The recent financial crisis has the brilliant minds in D.C. calling for a trillion dollar bailout of a system run amok. Everyone, from the president and his secretary of the Treasury to the speaker of the House, now seems to think that without this bailout the economy will fall into irreparable disarray.

Is the system truly that vulnerable? If so, failure is inevitable. It is just a question of when unless serious and painful changes are made. There is no easy way out.

The calls for new regulations and multiple layers of bureaucracy can be heard across the land. Yet why do the markets need regulation in the first place? Because the regulations in place were never enforced. What would make anyone accept the notion that new regulations will perform any better than the old ones?

If the average American spent as much time studying and analyzing their investments and savings as they do "American Idol" dials and busy signals, we would not need regulations. Truly free markets would reward well-run institutions. They would punish, and ultimately eliminate, poorly run or high-risk companies that care more about their CEO than they do their customers and investors. We have criminal rules for criminal activities, but we apparently refuse to use them.

Regulations are designed to protect people who either don't have the ability or are too lazy to protect themselves. If I have my money in the bank, a mutual fund, a money market or gold, isn't it my responsibility to make sure I choose a safe institution?

The systematic dumbing down of America and the lack of respect toward education is frightening. We teach children how to read, write and count. We teach them how to put condoms on bananas. But do we teach them a thing about money or the banking system? How about teaching a kid how to balance a checkbook or the proper use of credit? What about the Federal Reserve System of fractional banking?

We need not look any further than the current government fear-fueled, knee-jerk reactions of last week to see just how incapable the government is of fixing the underlying fundamentals that led to the panic on Wall Street.

After injecting $250 billion into world markets in three days and proposing what will easily be another $750 billion in new programs, the Dow Jones Industrial average ended the week where it began when it opened last Monday morning. One would think the market would have responded a bit better given the amount of money thrown at the problem.

Imagine if a trillion taxpayer dollars had been injected directly into the housing market, gold market or oil market? Take your pick. That market would have exploded. Yet the Dow ended unchanged after massive government intervention.

The answers we need will not be found in more deficit spending and more debt. Quite the opposite. We need less of both, and we need it now.

An honest analysis of the current crisis will reveal plenty of culpability for both sides of the aisle. So it is time to stop the politics and start the leadership. To watch McCain blame Obama and vice versa is disgusting. To hear Pelosi blaming Bush like a broken record is getting old. Am I the only one who has had enough?

If Wall Street or Main Street need a bailout, we should not allow the politicians to create more money or take on more debt. The recent rhetoric used to instill fear in America must stop. The comparison of our current problems with the Great Depression is ludicrous.

In 1929, unemployment was almost 26 percent. Today it is 6.1 percent. Have you been to a high-end restaurant recently? They are packed wall to wall with young people spending money like it is water, as they text on their $300 Blackberry while their $40,000 BMWs are parked with the $20-a-car valet. Give me a break. We are not even close to a depression. Yet if the politicians spend all this money we don't have, their fear-laced words will become a self-fulfilling prophesy.

If our leaders are serious about change and are willing to implement it, they should immediately reduce government spending. It is the only action that will produce meaningful results. Start by having every department reduce their budgets by 15 percent within four years. Instead of two government employees wasting half the day doing nothing, there will be one. This should be done in all areas of government other than those necessary to keep the population safe against attack.

The departments who cannot make the reductions should either be eliminated or bid out to the private sector. Efficiency is the mother's milk of the private sector and should be demanded at the federal level as well. Free enterprise has proven time and time again the private sector's ability to provide services in a more cost effective way than government.

Corporate tax rates, which are the second highest in the world, should immediately be reduced to encourage American businesses to keep jobs in America while hiring new employees. Entice corporations through tax incentives for implementing training programs and spending capital on infrastructure as was proposed in the stimulus package back in February.

All taxes, personal and investment, should remain at current levels, permanently. This will allow for long-term planning and give all Americans a stationary target on one of the highest expenses in all of our budgets, while at the same time spurring more prudent investments.

Nothing would send a stronger signal that America is serious about the future. We have already witnessed what the world thinks about our panicked "solution" of throwing money at the problem. Foreign investors ran to gold and treasuries last week in unprecedented numbers. Short-term treasuries have not seen these prices since the London Blitz in 1940. Millions around the globe moved money to safe havens.

Everyone wants to see the government get its act together, not saddle the taxpayer with another couple trillion dollars of debt. The market is demanding accountability and transparency, not additional regulation. Our leaders need to walk the talk. Words are cheap. Actions are always more effective.

So this year we have a choice. We can elect the most popular guy and his team, cross our fingers and hope he will get us through another four years. Or we can send a signal that says we are ready to make the sacrifices necessary to get back on track. But only if we have a leader who will reduce wasteful spending, enforce current rules and regulations and keep us safe.

That is the role of government. Nothing more, nothing less.

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