So this national debt is really a theoretical problem. Right? After all, the US can keep borrowing at record low interest rates without changing anything in the short term. Right? Well, that’s what the mortgage borrowers thought when they got in way above their heads with cheap credits. But really, why do we need to resolve this now? While the economy is so fragile? We can see how much austerity is shrinking European economies. Why do we need to take this pain now? The answer is that we don’t. What we need is certainty. Imagine that you were about to buy a car and the sales tax on the car could increase or the car itself may be recalled. What would you do? Probably nothing. That’s exactly how many businesses feel.
No One Likes Uncertainty
There is uncertainty about what government programs might be cut, how dividends might be treated and how much personal income taxes may rise. So businesses are also frozen into inaction. Last time we spoke about the impact the fiscal cliff would have on the economy. If you are a business and one scenario is a major economic contraction, you would definitely hold off on hiring. You may even get ready to get lean to weather the tough times.
So Washington can’t kick this can down the road. Much of this tough medicine such as tax increases may have to be taken in doses over a few years but we need to know it now. That’s certainty. And that will allow businesses to plan and move the economy forward. This week’s tip is ‘don’t wait to invest in rental real estate’.
Real Estate is the best investment in a growing economy and it is also an inflation hedge. If the market stalls because the economy and corporate profits shrink – returns from rental real estate may be the best bet in town. So you win every which way provided you buy right. To get help with investing in the right rental real estate, register.