The Current State of the U.S. EconomyThe United States economy is racing ahead at dangerous speeds, and it may be too late to prevent widespread inflation from hitting us like a brick wall. Ideally the economy should move ahead gradually and grow at a steady manageable rate.Mae West once stated “Too much of a good thing can be wonderful” and it seems the U.S. Treasury Secretary Summers agrees. Summers announced that due to our increasing surplus and booming economy, instead of having an outsized tax cut, we should use the surplus to further pay down the national debt. A tax cut, though most Americans would favor it initially, would prove counter productive. Cutting taxes would over stimulate an already raging economy, and enhance the possibilities of an increase in the pressures of inflation. Where as paying off the national debt would actually help lower interest rates and boost investments, and therefore further increase the wealth of the population, while keeping inflation at bay. It seems Federal Reserve Chairman Alan Greenspan beat the Treasury secretary to it. Greenspan could not wait for the economy to fix itself by paying of the debt. The United States economy is roaring ahead at about 5% annual growth rate, much faster then the federal reserve considers safe. In an attempt to keep inflation under wraps and fix the imbalance of the economy, the Federal Reserve raised federal fund rates half a point, overnight, to 6.5%, the highest in nine years. However the fed is not sure this will be enough too keep inflation from rising dramatically. The fear is that this dramatic rate increase is too late, though the market reacts immediately it takes the economy between six months to a year to begin to show the effect.The federal reserve has raised interest rates five times in less then twelve months, and the pervious raises are just barely beginning to take effect. The previous raises averaged around a quarter perce...
