Everyone says the country is in a mess, economically, socially and politically – and that something drastic needs to be done. How about throwing a tantrum? It is called “Occupy Wall Street.” Target those rich bankers (by no means all on Wall Street but who’s counting?), regulate those “millionaires and billionaires” till they holler (even if they only earn $200,000 a year), and make them pay more taxes (even if they already pay more than half). That should fix everything.

Here is one question for our earnest protestors: did you ever get a job from a poor person?  Of course, most of them are young and tell reporters their biggest problem is to pay off college debts – so they really do not know who creates jobs. Perhaps it is the tooth fairy. On the other hand, they might consider that hitting bankers on the head could be part of the problem rather than the solution. Is it helping that both Goldman Sachs and Morgan Stanley just posted large earnings losses and are trading below book value?

It is by no means just the young who are confused. After the media have put the protests at the top of the news for weeks—showing nostalgia for their lost Woodstock youth, and those scantily clad young women make great photos too—the sad fact is most Americans agree with them. A Washington Post poll shows two to one support for the young occupiers demanding “fairness” (37% to 18%) verses a 28% to 41% opposition to those old tea party types asking for sacrifices. A large majority of Americans oppose reform of the entitlements that are threatening to bankrupt America.

Both Presidents George W. Bush and Barack Obama’s solution was what is now a total of four stimulus reforms, a Bush one of merely $170 billion, with Obama raising him with $1 trillion in stimulus and $2 trillion in Federal Reserve System asset purchases, tough regulation of auto, insurance, banking, securities, environment and consumers and a “transformational” regulation of the one-sixth of the economy that is healthcare. No one seems to notice that all of this produced nothing, with nine percent unemployed, 16% when one includes those who have given up looking. The economy is hardly growing, inflation is up, the dollar declines and gold hits historic highs.

The former liberal, Harvard economist Robert Barro, is blunt: “What few know is that there is no meaningful theoretical or empirical support for the Keynesian position.” In fact, “there is zero evidence that deficit-financed transfers raise the GDP and employment – not to mention evidence for a multiplier of two” as almost everyone thinks. It did not even work in the 1930s Depression that only began recovering after Franklin Roosevelt started cutting back just before World War II.

We know the causes of the current “great recession.” As the Wall Street Journal demonstrated at the time: (1) “the original sin of this crisis was easy money,” especially from 2003 to 2005; (2) government-created Fannie Mae and Freddie Mac bought “increasingly questionable” Countryside mortgages, spurred on by Congress to issue more and more “affordable mortgages” to those with weak credit; (3) regulated finance firms like Lehman and Bear Stearns were allowed by the SEC to reduce reserves from the previous 10 to one ratio to 30 or 40 to one; (4) the Community Reinvestment Act of 1977 compelled banks to make loans to “poor borrowers who often cannot repay them,” which Act was strengthened in 1993 and 1994 by the Clinton Administration, and continued by President Bush. Fannie and Freddie were allowed to hold just 2.5 percent capital reserves compared to 10 percent for banks.

The demonstrators have a point with youth unemployment at 18% but they are looking in the wrong direction. The government did it. As early as April 6, 2005, Fed chairman Alan Greenspan bluntly warned the Senate Banking Committee: if Fannie and Freddie “continue to grow, continue to have the low capital that they have, continue to engage in the dynamic hedging of their portfolios, which they need to do for interest rate risk aversion, they potentially create ever-growing potential systemic risk down the road. We are placing the total financial system of the future at a substantial risk.”

As for those dangerous capitalists, as the great economic historian Joseph Schumpeter put it, most cannot say “boo to a goose.” The government frightens them. Obama has added 81,404 pages of new regulations for them to follow, costing $1.7 trillion a year and prison if they do not follow every jot and tittle. In our modern version of witch trials, Raj Rajaratnam was recently sentenced to the longest prison term ever for “insider trading” for telling an investor “I heard yesterday from somebody’s who’s on the board of Goldman Sachs that they are going to lose $2 a share.” Should he have kept this information from his investors? How about from your pension fund? And what other information must investors suppress in the future? Business is cannot understand all the confusing rules so it is immobilized and the economy stagnates.

Why does the government do all this regulation? It says it wants to “help” people. And who opposed easy money to buy things cheaper, to lower reserves to make credit card borrowing easier, to “affordable” mortgages, to no down payments, or to allowing poor people to borrow at lower rates they could not pay back? It was something for us and free so few complained. Now we blame it on the bankers but they were by no means the only ones to think the government was magic and could create money and jobs out of fine phrases and compassionate ideals.

Today, when one of the presidential candidates dares to speak blunt truth on Social Security, Medicare, Medicaid and the rest, he went from first to also-ran in one week. How do we know he was correct? The government Trustees tell us every year. For the future, economies and the taxes they generate only grow when productivity increases or when there are more workers with the same productivity. Both are unlikely today as regulation stalls productivity and births decrease, with the ratio of active to retired workers falling by one-third. In 1990 there were 32 million Americans over 65 but by 2040 there will be 80 million. Who will support them? Neither the likely Republican nor Mr. Obama promise anything serious – and that is before the elderly have a majority to force the young to redistribute its income to their retirement.

The most likely result is stagflation as in 1980, with no Ronald Reagan to stop it. What can be done by those not blind to this reality? It is clear that monetary capital is being eroded by the pent up inflation at the Fed, which will be exacerbated by exploding entitlement spending. Some inflation hedge will be essential and commodities like gold are the only ones available to average people. But human capital is even more important. Everyone but especially parents will be required to hone their skills and work habits so they become the least likely to be laid off in a rapidly changing Steve Job’s world. The unemployment rate for college graduates – contra the occupiers – is only 4 percent, 60% below average. For graduates who keep their skills current, long term unemployment is virtually zero. Even without college, the 15% who are self employed even with technical skills earn more than salaried workers and have lost less work. Entrepreneurs start behind but soon catch up, even without higher education.

The most important thing parents can do is teach their children to see reality as it is and to cultivate simple things that last like knowledge, work and family, while recognizing that work, whether paid or not, such as school or home work, is a value that requires a certain set of beliefs, which is why America used to be better. It can be so again if we are smart enough to relearn the traditional self-reliant but family/neighbor-supportive culture that made America great in the first place.

Most of all what we all have to do to fix the economic mess is to stop believing in the tooth fairy and hold fast to what is real.

Donald Devine was the director of the U.S. Office of Personnel Management under President Ronald Reagan and is the editor of ConservativeBattleline Online.