Also, rapid innovation rates, including more powerful bandwidth, and numerous wireless appliances connected to the Internet, and rapid diffusion rates, i.e., the mass consumerization of information tech and its applications, will continue to thrust the economy fast-forward. Low inflation, King dollar and the technology-induced productivity rise act as shock absorbers to cushion the impact of things like temporary energy price hikes, Y2K transition, or even Fed tightening actions. But there are, however, two other prosperity threats that must be addressed if we are to maximize our economic growth. Add to this the tax-hike effect of higher energy prices, another economic depressant. So, in a massive resource transfer, overflowing government coffers are draining purchasing power from the private economy.
Surpluses are up, but private saving is down from diminished take-home pay.
And debt paydowns to wealthy bondholders and foreign governments provide no relief to the vast majority of the workforce, who do not own bonds. Another prosperity threat comes from rising regulatory burdens. Overzealous regulation, particularly the Justice Department's anti-trust lawsuit to break up Microsoft earlier this year, blocks the supply of risk capital necessary to finance innovative technologies just as surely as big tax hikes or major inflation spikes. It is no coincidence that the Nasdaq market peak last winter came nearly at the same time as the Microsoft break-up decision. Risk capital ran for the stock market exits.