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Innovation needs… Capital!

To foster innovation, we must have an economy that values saving and investment – not debt and spending; you need a growing pool of capital available for people to be willing to risk on untried solutions.

The deterents to capital accumulation, investment, and ultimately innovation are the following: – Taxation;
– Regulation;
– Emphasis on debt and spending;
– The simple fear of govt confiscation through myriad of other political tricks

These things have sent – and always will send – capital screaming for the exits, looking for safer places to thrive. Sadly – and this is impossible to over-emphasize – it’s made investors less willing to take a long-term view, or be willing to accept a longer time-frame to profitability.

The more opportunity for confiscation or failure due to non-market factors, the less willing investors will be to risk their capital. No equations, no econometrics, no fancy graduate-level Neo-Keynesian hypothesis is required to understand this.

Innovation will explode when sound money returns, and govt meddling in the economy and our lives ends. Would you invest in a business in, say, Cuba? Somalia? North Korea? Ireland? Great Britain, even? Some might, but by and large, the greater threat to capital confiscation due to corruption, regulation, or inflation, the less likely capital accumulation. But if capital can accumulate, there you find innovation.

Innovation needs capital. Capital needs the act of *saving*. Postponing some consumption to allocate for the future. So simple, so profound.

We must stop the heart attack and purge the gunk from the patient’s bloodstream … manage a difficult healing and rehab period… THEN we can get the patient in shape for a marathon…

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