In his State of the Union address last night President Obama promised to double exports in 5 years. Is that possible?

Normally this would not worry me too much but I recently watched a series of 8 YouTube video of Dr Albert A. Bartlett Professor Emeritus at the University of Colorado lecturing on the exponential function.

His opening statement is,

“The Greatest Shortcoming of the Human Race is our Inability to Understand the Exponential Function”.

To those that may be mathematically challenged it is all about things that increase at a constant rate and what happens over the long term.

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It’s congratulations to pickup truck owner and new senator Scott Brown for winning Ted Kennedy’s old seat. It was truly amazing to see him come from 30 points behind to take the seat from apparent “shoe-in” Martha Coakley.

But what is far more important is what it means for the future of the socialisation of America. I’m sure it won’t stop it as it has been going on for years, but it has received a serious set-back.

More importantly the Health Care bill is all but dead which means the US economy will not have to find $1 Trillion dollar to provide health care for about 30 million people.

This is not only good for the US, it is good for the world. The world needs the US to create wealth through business and entrepreneurship, not spend 20% or more of its budget on a national health care system. Why follow the rest of the developed world into the health care black hole?

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Sometimes when researching to find information that helps me understand why the world is in this economic mess and what I can do to protect myself and my nest egg, I come across some “real gold”.

That just happened today and I have spent considerable time reading and absorbing much of the information I have found.

It started off quite normally with me wanting to catch up on some stuff from Ron Paul. I started at the Mises site where there are many FREE ebooks by current and long forgotten economists and economic writers (philosophy too. I know,  why don’t I get a life, but I like reading this stuff )

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I’m talking here about uncertainty because of gross government interference in the economy and in the business cycle, not uncertainty normally connected with any new business investment. Business people are used to dealing with uncertainty in they daily lives.

When the government changes the rules at their whim, or creates huge national debt and massive spending along with potentially large increases in tax there are just too many unknowns on which to plan a new investment.

This is made worse when governments do these things throughout the period of a business investment. Any one of the government changes could make an investment unviable after a business has committed significant resource to it.

Add to that banks are not lending to small business because they have no confidence either and because their money (much of it taxpayers money) is safer in their hands speculating on the stock market or deposited at the FED where they can get paid interest.

One last problem is many business may be waiting for “their turn for a government handout” so they may not invest in a new venture until/unless the government subsidises it and them.

The basis of our financial system is flawed  and so nothing will be fixed until governments have the guts to change the system. It is inherently unstable to begin with.

• Booms and Busts will continue until the world bans the fractional reserve banking system, and creates a free banking system.
• Booms and Busts will continue until central banks are removed and private banking made accountable for bad investments and over-leveraging and are allowed to fail. At the very least they should be forced to allow interest rates to float and find their “natural level” for the economic climate at the time.
• Booms and Busts will continue whilst ever governments believe there are votes in forcing banks to make below market interest rate loans to people who cannot afford them.
• Booms and Busts will continue until governments stop believing that printing money is actually protecting their nation from the downside of a boom and accept business that do bad things or make mistakes have to fail so the capital can be freed up to go where it can do the most good.
• Booms and Busts will become bigger, faster and more frequent due to technology. We have just seen how massive liquidity from printed money (doubling the money supply) has fuelled a stock market rebound that no one predicted. Even though it may be short lived savvy speculators have made a fortune including the banks saved by the tax payers.

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