Likely gridlock in Congress could threaten economy

Economic growth based largely on stimulus and quantitative easing (currency devaluation) is a media-driven illusion. Real or growth adjusted for currency devaluation is driven by market forces such as competitive advantages, geographic proximity to supply and demand, political stability, capital flows supporting investment in physical and human capital, etc. While the form and confidence in centralize government plays a role in attracting capital, but its spending programs can support sustainable growth without unintended consequences.

There is no such thing as a free economic lunch. Centralized stimulus and quantitative easing, regardless of their official intentions, carries a direct and indirect price. It’s the indirect price, in the form of currency devaluation – reduced purchasing power of salaries, wages, and incomes that seems to always elude the public.

A standoff between the Obama administration and emboldened Republicans will probably block any new help for an economy squeezed by slow growth and high unemployment. Congress might also create paralyzing uncertainty for investors and businesses by fighting over taxes, deficits, health care and financial regulation.

Source: finance.yahoo.com