The worst 5 year period in history was 1929 through 1933, GDP annualized declining 4.9% The top marginal tax rate in 1928 was 25%. During the best 5 year period 1940 – 1944 GDP grew at 13.7%. The top tax rate in 1939 was 79%. The best period not in W.W.II was 1933 -1937. GDP grew at 7.2% following the top tax rate being raised to 63% in 1932.

In the last 25 years the best 5 years was 1983 – 1987 growing at 4.5% coming of a 50% top marginal rate in 1982. The worst 5 years was 1989 – 1993 growing 2.2% a year after the top rate was cut to 28% in 1988.

When the top marginal rate is high the rich take less income, pay less tax, live less lavishly, but they invest more in their businesses, hire more people and grow the economy faster. The rich are paying too much in taxes someone needs to have the courage to raise the top tax rate and stop them.

This does not need to be the case. We do not have to have a government that pays $430B in interest to private lenders (FY 2007) and is continually at war because it forces the government as borrower of last resort to borrow to prop up the economy.

The government can issue money directly and keep the benefits of seignorage for the people, saving vast amounts of interest expense as well as not needing to fight needless wars. It would also eliminate business cycles, which are caused by expansion and tightening of bank lending and its impact on money supply growth (and the need to compete for $ to repay borrowing costs.

The approximately $2T the FED created over the last 6 months is doing nothing because of the basis of issue of FED money. The money goes into the hands of hedge funds, investment banks, etc and goes into asset bubbles rather than keeping the middle class from sinking beneath the waves. Until this nonsense ends and the public wakes up to the reality that is its monetary system this situation will not improve. With the distribution of money in our society and perpetuation of the existing trends a crash is inevitable.

It almost sounds as if you are saying these two issues are mutually exclusive. Interest rates held too low for too long and the absence of existing regulations caused this mess.

Now it’s time to let the market correct itself, not continue to create positive feedback loops!

Until the goverments of the world realize that a free market society that speculates on commodities that support live like food and energy (things we cant just stop buying when they get too expensive) we will all suffer through a deterorating economic downturn.

We should either fight in Iraq and crash the economy or pull out and use the cash to fight the economy at home.

Read your ‘Sun Tzu’s Art of War’ that’s the only way we are going to survive.

This proves it is not the mortgage defaults causing the problem. The only thing big enough to cause this kind of damage is the US defaulting on it’s 9 trillion dollar national debt.

Yep you heard it right the USA is now officially bankrupt and our dollar is worth less than an Iraqi dinar.

Why do you think all the leaders are telling us everything is alright and not to worry? Things have totally fallen apart. We are not paying back the interest we owe on the national debt.

Ron paul is right. We need to cut spending overseas. Our empire is stretch beyond its limits. Our foreign policy is flawed. No one talks about a balance budget anymore this includes the two leading candidates Mccain and Obama. Mccain wants tax cut which benefits the rich. Obama want to increase taxes on the rich to give to the poor. What are they proposing to help this country? nothing.

A message to my fellow Americans
It’s ok you know anything about the economy, politics, monetary policy and financial matters but at least elect someone who does like Ron paul.

Of course to panic now would be a mistake,we aretoo close to the next FALSE rally. You should wait for the next FALSE rally off this intermediate bottom (Dow 11,000). Then GUESS when the false rally is over and SELL half of what you would like to be rid of. Then GUESS when the rally is “for sure” over and sell the remainder to get to your “sleep comfortable” level of stock exposure. Then wait patiently. The Dow will be nicely priced when it finally gets into the very low 10,000 range, but mid 9,000 is as close as we will get to a “sure thing” bottom. And it isn’t likely to get to these low levels without a few false rallys. Finally, don’t panic and get sucked into buying the false rallys and for heaven’s sake don’t watch CNBC!

WHY?

This is an opportunity to educate business leaders and individuals on basic financial principals. Don’t borrow what you can’t afford to pay and don’t lend what you can’t afford to lose. Duh!!!

These are lessons that my parents and grandparents taught me (I’m 40). Sounds like these need to be re-learned by society today.

pull your spare cash out now in $20 bills and stash it under your mattress.
cause it’s going to get real ugly real fast and by the time you go to get it out it’ll be too late.

http://www.portfolio.com/views/columns/wall-street/2007/03/29/The-300-Trillion-Time-Bomb

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I am not for bail outs with tax payer money, but I’d prefer we let a few million Americans who are not repaying loans they signed for lose their homes rather than letting banks fail which would have a castrophic affect for the entire population of 230 million Americans.

As far as the doom and gloomers out there, personally I don’t see it. I am not saying economic times are not bad, but it is not the end of the world. I work for a major cruise line. Most of our ships our selling out before the actual sail date and therefore prices are up from last year. If things we were as bad as some try to paint things, our ships would be sailing half full like they did after 9/11.