The U.S. Needs More Than Just Cheap Money

The United States doesn’t even have any more money for stimulus plans. Investments with cuts in other areas are the only possibility.

The U.S. has seen better times. To achieve this realization, one need not look to the excessively indebted U.S. budget. It’s enough to look at the economic data of the country.

One percent economic growth in the second quarter is simply too little to reduce the high unemployment of many months to a tolerable level. In turn, the bad job market is burdening the all-important domestic demand of the U.S.. Since the outbreak of the financial crisis three years ago, there have been few exceptions to this development. Barack Obama’s presidential predecessor already struggled through this situation with stimulus plans and tax giveaways. Obama, himself, opened the money sluices even more. In the meantime, the country is so deep in debt that there’s no more money to spur economic demand.

Ben Bernanke knows about limited opportunities.

So far, the many stimulus plans have brought about little return, so the investors are staring spellbound at the decisions of the Fed — as if the ascent or decline of the strongest economic power in the world depended upon the words of Federal Reserve President Ben Bernanke alone. He knows about his responsibility.

He also knows about limited opportunities with the Federal Reserve’s interest rates at a low point. Therefore, it would be smart of Bernanke not to hesitate and to loosen the purse strings again with another purchase of government bonds.

Money for investments must come from elsewhere.

By now, it’s clear that America needs more than cheap money to get its economy going again. Companies must become more innovative, more flexible and more competitive. In addition, the country has to modernize its infrastructure.

This is difficult for a nation that, in the medium term, must save much more than they have been. The money for such investments must be taken from other sources. As long as U.S. policy doesn’t implement these changes, the country will not recover — no matter which course the Federal Reserve takes.