The only way out of the mess we're in is through innovation, the creation of small businesses and good old hard work.

Did you ever think you would see an America in which most people see no problem with unemployment around 10%; 0% interest rates for more than a year (even though the economy allegedly grew more than 5% last quarter); $150 trillion of government liabilities coming due in the next 20 years; rising taxes; taxpayer-guaranteed bank and Wall Street profits; the government takeover of a major corporation like General Motors; excessive government control of multiple industries; and a Treasury market dependent on the sale of trillions of dollars of new bonds every year, with the Chinese government and our own Federal Reserve as the critical buyers?

The list goes on. I don't recognize this country. It does seem like all those people who warned that a lack of basic math skills would kill us one day were right. People in this country cannot do basic math. If they could, there would be riots in the streets. I guess everyone is too busy watching

Jersey Shore

and

American Idol

.

Even a simple thing like the unemployment rate shows our ignorance. The Congressional Budget Office uses a 5% unemployment rate in its estimate of future growth and liabilities, but the chance of 5% unemployment any time in the next 10 years is almost zero.

We need to either have millions of people of working age die or have about 400,000 jobs added per month for several years in a row. We never even got close to that during the best job market of our lifetime, which was in the late 1990s, and we never even got more than 200,000 jobs per month for the entire decade that just ended. That was with record low interest rates.

Just to keep the unemployment rate where it is we need 150,000 jobs added per month --

every

month. It's doubtful we can even keep that up for years, especially with either much higher interest rates or much higher commodity prices and inflation.

One way or another you have to pay for money. Either you pay with higher rates, or with a cheaper currency and higher inflation. Except our economy is 67% consumption, so any export-oriented job gains from a cheaper currency will be wiped out by the lack of purchasing power of consumers. How does this add up to anything but disaster? All we need is Emperor Nero and his fiddle right now.

Another area that makes no sense is how we're dealing with small businesses. Allegedly, we all want to create private sector jobs. However, the government is doing everything possible with tax increases, regulation and lack of funding to hurt small businesses.

Health care reform is a huge tax on small businesses. In addition, the legislation levies a 3.8% tax on people with higher incomes, many of whom are successful small business owners who could otherwise use that money to hire new workers and expand their businesses.

New proposals in Sen. Christopher Dodd's (D., Conn.) financial bill would make it much harder for investors to fund start-up businesses. Why the government would want to do this is totally beyond my understanding.

There's also the $30 billion for small business funding that has been promised for more than a year by the federal government but is still locked in bureaucratic red tape. Small Business Administration lending has been cut back dramatically, even as trillions of dollars have been handed to the big banks with no questions asked. If we want to create jobs, why are these things happening?

But enough negativity, which of course is considered un-American. What is the good news? Well, the good news is that if you work for the federal government or a big bank, or you're a Wall Street speculator, or you're already a multimillionaire, you are doing well.

Not good enough? OK, if you're not in one of those categories, you have a few choices of how to make it in this economy. One, you can try to join one of those groups. Two, you can try to marry into one of those groups. Three, you can try to immigrate into a country with a more vibrant economy, such as the People's Republic of China.

If that last one sounds bizarre, I feel your pain. But it's true.

Fortunately, there is one more option. You can innovate. What's that? It's good old-fashioned capitalism. Create something new that people need or want. Even in this stagnant and mismanaged economy, some brave Americans are still innovating and creating wealth and jobs. This is particularly true in the software industry, which I believe is the greatest hope we have for our economy.

Even though venture funding is down, angel investing is down and small business lending is down, there are still 600,000 businesses starting every year.

Many of the most promising new companies are in technology, and especially in software.

Twitter

is growing.

Facebook

is growing.

Zynga

is growing.

Mint.com

is growing.

LinkedIn

is growing. The list goes on. Some of these companies will become the future

Google

(GOOG) - Get Report

,

eBay

(EBAY) - Get Report

,

Yahoo!

(YHOO)

,

Amazon

(AMZN) - Get Report

or

Microsoft

(MSFT) - Get Report

.

What do they need from the government and the taxpayer? Nothing, except to be left alone and not destroyed with taxes and regulations. Entrepreneurs, especially in software, regularly self-fund their businesses and raise money from friends and family. This is how 99% of businesses are funded in the U.S. -- not through sitting around waiting for a handout or a sweetheart deal from the government via lobbying and political connections.

It's no accident that the only time in our recent history during which middle-class people improved their standard of living was during the technology boom of the late 1990's, which was centered around software and the Internet.

People only remember the bubble of 1999 and 2000, which was actually caused by policy errors at the Federal Reserve. However, that period from 1995 to 2000 was the best job market in this country since the post-World War II boom. Technology creates good, high-paying jobs. It also raises living standards for consumers by creating new products and services and more efficient ways of delivering existing products and services.

For investors, maybe a suggestion is to take some of your capital that is sitting in an account earning nothing and, instead of speculating on Wall Street, or trying to hide in bonds, or betting on another real estate bubble, make a small bet on a brighter future for this country by investing in a private technology company or other small business.

Your investment won't be guaranteed, but one thing I know is that any time somebody tells me a return is guaranteed I hold onto my wallet. In real life outside the privileged world of Wall Street and the federal government, there is no upside without downside and risk. That is capitalism. That is what built this country.

Christopher Grey is a co-founder and CFO of

CapLinked

. CapLinked makes it easier for companies and investors to connect with each other. He was previously a senior executive and partner in private equity, finance and banking for 15 years and directly involved in the origination and management of billions of dollars of debt and equity investments. Grey is a founding member of the Capital Markets Forum II of the National Association of Office and Industrial Properties. He is also founder of and on the Steering Committee of Stanford Professionals in Real Estate. He is a graduate of Stanford University, with a degree in economics.