Let's do what we did right before this mess

The government's near trillion dollar economic stimulus spending plan may help our economy rebound in the short run, but for long term stability we need to consider the long prosperous period we enjoyed from 1950 to 1990. What happened to it and how can we regain it?

First, the housing industry went bad when people sought loans they couldn't afford; then banks granted those risky loans. Then, when banks had to start granting fewer loans, fewer new homes were built. The auto industry built too many unwanted or poorly made models. Many bought imported vehicles instead.

When people working in the housing and auto industries lost their jobs, they couldn't buy much, causing more business collapse. What did the government do? While the Federal Reserve had been effectively raising and lowering the prime interest rate to control inflation and deflation, this time the Fed kept responding to all economic news by only lowering the interest rate throughout 2008. Thus, the recession came about because of the greed of the people to live beyond their means with the problem exacerbated by banks and government.

Now our government is trying to substitute government dollars for personal spending; that can only be done short term. For long term stable prosperity, we need to get back to how our economy worked during most of the time period mentioned. People worked hard to make competitive products, and they were more responsible by buying homes and autos they could afford. The banks granted those loans and reaped the profits in interest payments, so they remained solvent. During periods of inflation and deflation, the Fed raised or lowered interest rates to encourage or discourage spending by business.

Now, we must return to financial responsibility for long term prosperity.

Donald B. Abbs

Elgin