Trump’s Economy Must Create New Capital

The US economy has been experiencing a capital shortage for decades. Economic policy must be geared toward capital creation.

For decades the US has experienced a capital shortage. The result of this has been the high cost of capital for existing firms and lack of opportunity for new firms. The federal government makes the problem worse by removing trillions from capital markets to finance the annual deficits and the huge public debt. It is time to fix this.

There are basically two inputs into the economy: capital and labor.

Regarding labor, the US has been experiencing a labor shortage for the past three years since the pandemic shutdown ended. That’s mostly due to a decline in the labor force participation rate. That means there is a lower percentage of adults either working or actively seeking work.

The labor shortage has pushed up wages in general and particularly in some key industries. While the labor shortage has decreased, even today there are more job openings than unemployed people.

This exists mostly because the unemployment problem is structural, meaning that there is a mismatch between the skills needed for the open jobs and the skills that the unemployed workers have. Eventually, this should be minimized as market forces will drive young people toward the…