Posted on July 9, 2006
Filed Under Uncategorized |
by Tim Tursick,
There was a largely ignored speech given today. Donald L. Kohn, a Vice Chairman of the Federal Reserve Board of Governors spoke to the European Economics and Financial Center Seminar at the House of Commons in London. While the world tilts and whirls on every comment by Chairman Bernanke, I believe Mr. Kohn’s comments give a very clear idea about the vision and consensus of the board in general as it relates to future monetary policy.
If Mr. Kohn’s comments are to be perceived as the views of a team player (and why wouldn’t they be?), then the case for an end to rising rates has much stronger support than it did before today. While much of the speech laid the ground work for key points, I believe the most important key point Mr. Kohn delivered was this: “At some point the United States is going to need to finance its imports with the proceeds of its exports, not with foreign savings.” This statement tells me,more than any other, of the recent past, that the Fed has decided the only course for the foreseeable future is the weak dollar course. The real question that is yet to be answered is this: What will the United States be able to export in substantial quantity that can take the place of foreign investment?
I have written a few papers in the past about the need for massive corporate and possibly some government investment in New American Industry. It is not enough to simply plod along as we have been with big dollars being poured into R & D, with little return for actual producing industries. The biggest area we can regenerate American Industry Export Growth in is the automobile. The automobile as we have known it, a fossil fuel guzzler, should be all but considered dead for the move I suggest. Believe it or not, we have the technology to build a hydrogen infrastructure, with hydrogen fuel stations and cars that use hydrogen as fuel for internal combustion engines. We have the technology to go into production now. There may be minor glitches along the way but, isn’t that true in all technology? No technology is perfect when first fielded.
There are two projects currently underway to prove what works and what doesn’t in a hydrogen fueled transportation system. The Hydrogen Highway Projects in California and; I believe there is one in the mid-west. They are keying in on personal vehicle use which is where we need to make the change. It is time to leave the oil to the big diesel movers, aircraft and the plastics manufacturers while the rest of us move into hydrogen. The only thing needed is capital investment on a massive scale. Investment may need massive injections but, the returns promise to be much greater.
Comments and discussion welcome below.