Tolls on the U.S. economy

The U.S. economy is losing its global competitiveness due to the following policy errors: 1.  High Taxes and Labor Unions are making manufacturing uncompetitive in the global market, resulting in a shift of the economy towards more driven by service & consumption.   Engineering jobs are now replaced with sales and customer service agents, making science, math, and engineering unattractive subjects in college. 2. Stringent immigration laws are driving science, math, and engineering foreigners trained in U.S. universities (often on […]

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The Value of Gold

Recently I had a conversation with a friend, who asks me, “why is gold valuable?  It is just a metal that people dig it up and bury it again underground.  It is not income-generating.  You can’t eat it or use it in any productive purpose.  Then why do people buy it and invest in it?” I think he is right in that gold does not have much value as a productive asset.  The value of gold, however, comes from it […]

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U.S. Demographics and Socialism

If you are wondering about where the U.S. economy is going for the next 20 years, you can bet on that it would become more and more socialistic.  Nationalizing health care would only be a matter of time.  And the government will take a larger and larger role in our lifes.  How do I know that?  It is simple, we have the following demographic drivers: 1.  Baby boomers are starting to retire.   After the recent crisis, most of them do […]

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Keynesian vs. Austrian Debate on Deficits

Recently there are a lot of debates between the Keynesian and Austrian economists on the skyrocketing government deficit. My opinion is this: In general, government spending is wasteful.  To expect governments to efficiently allocate capital is a larger mistake than to believe in Bernie Madoff. Keynesian policies only makes sense if consistently followed.  The true Keynesian policy maker would save money during good times and spend money during bad times.  The intention of such policy is to smooth out the […]

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Decoupling of Stock Market & Economy

The recent stock market rally signals a decoupling between the stock market and the economy.   The economy, given its current state, would have a L-shaped recovery at best.   As the consumers facing terrible job market, and high debt levels for households and government remains if not worsen, the economy powered by consumption is not likely to have a robust recovery. On the other hand, aggressive cost cutting has fueled a recovery in corporate profit. However, sales trend still remains weak.  […]

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