Today’s economic theory is based on a former “closed economy”.

Much of today’s economic theory is founded on a “closed economy” in which the US operated decades ago. In the good old days, when the government stimulated consumer confidence it resulted in consumer purchases that were usually filled with US manufacturing and production. But today when the government stimulates consumer spending it translates into additional production in China or Japan and only occasionally in the US.

And our government tends to borrow for this stimulation.

So we are using yesterday’s outdated tricks in a different economic landscape.

America’s weakness is not in borrowing, spending and consuming (we are gold medal champion consumers). Our problem is producing enough to meet this growing consumption. We are challenged in producing enough products that the rest of the world wants to buy.

Should we stop subsidizing consumption and start emphasizing production? We could do that via tax treatment, public messages and strive to produce more products that we can sell to the rest of the world.