For those in Washington reading, here is my economic Christmas wish list for 2023.
Stop raising interest rates. Last year I wished for higher interest rates and I am pleased we now have those. I feel we are back to a more balanced position. Higher interest has made borrowing a bit painful, as it should be. It has also rewarded savers, and that is also a good thing. But there is a limit to any good thing, and I think we have reached it. The Fed wants to keep raising interest to combat inflation, but I don’t believe such an action will accomplish that. If anything, higher rates now may be fueling inflation. I’ve never felt the Fed should have a monopoly on controlling interest rates given their inherent conflict of interest. I mean, which industry benefits most from higher interest rates? Have you looked at your credit card bills lately?
Stop giving away money. Several states, having lots of extra unused Covid relief funds kicking around, have announced plans to give some of the money to their residents to help them with higher prices. This is absurd. Inflation is caused when too many dollars are chasing too few products. If you hand out more dollars how is that going to help? It may for a moment put a smile on someone’s face when they have a few extra dollars to buy groceries for a week, but the following week those excess dollars will tilt the supply and demand scales once again towards more inflation. Just stop with it already! You cannot put out an inflationary fire by pouring money on it.
Return to an “All of the above” energy policy. Great news came out of Lawrence Livermore labs this week with a successful nuclear fusion experiment. New designs for more traditional nuclear plants that are safer, and cleaner are also being implemented in specific areas of the country. Advancements in clean, cheap, and abundant energy sources will continue moving forward, but all of them take time. While we wait, we have got to stop strangling our economy by abandoning current energy sources prematurely. If we are serious about fighting inflation, restoring America’s abundant energy sector while we work on developing new sources, would be a great first step.
I wish for a growing body of representatives in congress willing to depart from party politics and work together for a common good. When I studied politics in college on day one my professor said that the definition of politics is, “The Art of Compromise.” No one likes to compromise but it is what reasonable people with different opinions do. As an example, in real estate investing I have learned that the best negotiations end with both sides feeling they had to compromise a little too much.
Those are just a few of my Christmas wishes. But mostly I wish for a Christmas when Americans can start working together again for our joint future. I really believe most have the same wish.
Dan Wyson, CFP® is author of “The Gold Egg," and “21 Financial Myths” and owner of Wyson Financial/Wealth Management 375 E. Riverside Dr. St. George, UT 84790 - 435-986-9525 – Securities and Advisory services offered through Commonwealth Financial Network, member FINRA/SIPC, a registered investment advisor