For some time, I have believed, however erroneous, that you could classify economic ideology into two main camps: One based on John Maynard Keynes which suggests that government spending is the cure for deep recessions or depressions to make up for the lack of consumer spending and confidence. The other camp, most recently popularized by Arthur Laffer, suggests that you cut taxes to stimulate spending and thus pull yourself from the depths of recession or economic depression.
As we look at Europe and our predicament, we may come to the conclusion that neither of the above solutions is viable or sustainable over any length of time without creating major social and economic stress to your society and the way of live that we have come to enjoy.
It has been recently suggested by an analyst at Pimco, that the US national debt will top 13 trillion dollar dollars within the next few months and that the Keynesian theory of spending ourselves out of economic doldrums will not work. The same can be said for the Laffer curve ‘trickle down economics’.
At 13 trillion dollar debt, we are at parity with our GDP… The question I have is, are we not becoming the next Bernard Madoff running an even bigger Ponzi scheme, selling treasury bills to pay the interest on the debt without adding to our national economy.
If any of the above resembles the true state of our economy, we are in deep trouble. The chickens are coming home to roost.
I am interested in your comments.
No comments:
Post a Comment