All agree our economic recovery is proceeding at a snail’s pace, not at all what was expected by the Feds pump priming exercises that have added $7 trillion to the National Debt and extended the Federal Reserve’s exposure way beyond what anyone would have expected before.  Some argue that the “hoarding” of funds by private companies and individuals is holding back growth,  others that the slow growth in wages or increased concentration of wealth is to blame,  and still others look at US money held abroad as the culprit.  The only speculation that I have seen that makes sense, however, is the increasing option taken for greater leisure and time for personal pursuits rather than the crass pursuit of lucre.  This leads to the apparent contradiction that, while we may not be increasing our wealth, we may be increasing our well being.

Whatever the culprit, we need to change gears in our pursuit of better economic performance, at least in terms of measured economic growth.  Some propose confiscatory taxes to feed more government spending.  But we have already seen how this has not moved the needle sufficiently.  The only sure result of higher taxes will be to make the money even harder to find and to do this we have a whole army of financial planners ready to make a bundle off of better ways to cheat the tax man.

My proposal remains the same as always, the certain way to pump up the US economy is to eliminate the capital gains tax.  The stimulus to investing coming from no tax implications in making the investment decision is enormous.  Ebay gives us an inkling of how effective a tool taking away capital gains tax would be.  There are thousands if not millions of American who make their living using Ebay and its clones to make gains that are seldom, if ever, reported on tax forms.  Imagine what this would do if applied to the general world of buying and selling capital items, e.g. homes, property in general, works of art, vintage cars, gems, and such.  Even more enticing is the effect on buying and selling such items as stocks and bonds, mortgages and other loans,  index funds, and such.

I realize that many, if not most, will reject my modest suggestion as simply a way to insure that the rich get richer while the poor fall further behind.  But here I would remind everyone that the only ones who have really benefited from six years of “priming the pump” with Federal funds have been those lucky to be in the top 1 percent.   So while what I propose may benefit the rich,  I am confident it will spark a revival in the economy that is so desperately needed by all.