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The Future U.S. Economy

 
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PostPosted: Sun Sep 27, 2009 3:13 pm    Post subject: The Future U.S. Economy Reply with quote

It's difficult to be optimistic about the U.S. economy. Reagan became president at the right time, just before the 80 million Baby-Boomers (born between 1946-64) entered "prime-age" (35-54), accelerating the Information Revolution. Afterall, economies are made up of people.

The last of the Baby-Boomers will leave prime-age in 2019, and all of the Boomers will be over 65 in 2029. In a few decades, half of the U.S. population will be Third World immigrants and their offspring. They will generally have a lower skill level than the Baby-Boomers, unlike immigrants a hundred years ago, who had the same general skill level as the domestic population.

It will be expensive to raise skills of poor Third World immigrants, and they will receive other social services. Moreover, they will work harder and longer to support the retired Baby-Boom generation, not only with Social Security and healthcare, but with other goods and services.

U.S. households should have received a $700 billion tax cut to complement the $700 billion in TARP, to accelerate economic growth. Household balance sheets should have been strengthened, to spur demand of existing assets and goods rather than create new ones (e.g. concrete, shovels, and hard hats). The U.S. government has chosen to destroy excess assets, goods, and capital rather than induce households to consume them. Over the past year, there has been massive inefficiencies placed into the system. So, we can expect slower real growth for decades, since the U.S. economy peaked in 2007.
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