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Hello, friends
Every time I turn on a TV set (which isn't really that often) I hear about the "New Economy" versus the "Old Economy." It seems that everybody from Fed Chairman Alan Greenspan to CNBC's Joe Kernan has an opinion on the effects of how these diverging groups are affecting the American economy as a whole. And if you listen to Mr. Greenspan it is the productivity gains due to the new economy companies that have kept inflation low.
The U. S. government had a relatively easy time during the last fifteen years thanks to the incredible growth of the technology sector. Microsoft, Intel, Cisco, Lucent, Oracle and many other companies have contributed significantly to the bottom line of United States government. But it appears as though the days of double-digit quarterly growth may be nearing an end, and the stock market is nearing more normal valuation on some of the older "new economy" stocks like Worldcom, Microsoft and Lucent (remember Lucent is just the new name for AT&T's Bell Labs).
I am not a Keynesian...I do not believe that the government should (or can) micro-manage the economy; however, the government and the economy are inextricable. As the economy prospers so does the government. The best thing that has happened to the economy in the last decade was the US government budget surplus, and much of that can be attributed to the growth of technology (in spite of what the politicians want to claim).
Well an old economy nemesis, oil prices, are getting ready to rear their ugly head and I think by the time this round of increases is over ripple effects will be felt in both the old economy and new. I have been wondering why, since gas prices have doubled in the past two years, inflation has been relatively tame. I know the government factors out the "highly volatile energy prices," but at some point in time the higher price of gas has to filter down to the consumer and no company, old economy or new, is invulnerable to the increases. We have to see these increases come out of our pockets sometime. And as the prices increase, the economy will slow--remember stagflation?
As growth slows for the economy, growth must slow for the government or the budget goes to deficit and that would be bad. Very bad. Especially since none of our political leaders saw fit to pay off a significant amount of the 4 trillion dollar national debt with the extra money they were collecting.
So I think it is time that we stop talking about the "old economy" and "new economy". We need to start looking at the government. Our leaders must act responsibly, to begin to pay off our national debt and keep spending increases to less than the growth of the economy. Of course, my opinion isn't on anybody's mind. Nobody is talking about this issue, either in the presidential campaign, or Georgia's senate and house races. At least, nobody that I have heard. Randy Golden, Publisher
Randy's Corner
Notes from our publisher, Randy Golden
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