Greenspan Says Economy Regaining Some Traction

Fed Chair Greenspan came before congress today in testinomy that seems to center around where he believes the economy to be, reasons why it is not better and where the future is headed in terms of entitlements. I am sure that Mr. Greenspan has better telemetry on the economy than I do, and I completely agree on measures that he is proposing before congress to help cut forthcoming baby-boomer costs associated with social security and healthcare (medi-care)

Economists viewed Greenspan's comments and the latest Fed survey as signs of a third rise this year in short-term interest rates when Fed policy-makers next meet, on Sept. 21.
Economists expect the Fed to increase a key rate to 1.75 percent from the current 1.50 percent.

What is confusing most economists is whether or not we are in a traditional "sustained economic recovery". The problem is that we are in a new era. Budget deficits, trade deficits, soaring public and private debt; these are anchors that will put a roof on how high rates can go and how fast the economy can grow. We will be experiencing growth in different spots of the country, but the contigous regional growth will begin to subside. Monetary and fiscal policy has allowed these traits to make up the new landscape in the US, and created a land where the value of our currency will continue to slowly erode in an internation decathlon of currency supremecy. Money growth has outpaced the growth of the TRUE economy, and this has in tern caused millions of jobs to leave our shores and even our continent. Our infectious appetite for cheap goods bought on tommorrows dollars are what will eventual cause flat economic growth. Homeland security and military movements throughout the world are costing the taxpayer alot of future dollars. It is the hope and wish of the sitting President that things improve for his reelection bid. They are ok for the present but is a sustainable and decreasing unemployment rate possible with these conditions?

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