Can We Borrow Our Way To Recovery?

re: (borrowing and) spending as stimulus..

Fallows (and Krugman, etc.) miss the elephant in the room. China is spending from its rainy-day-fund. Japan essentially did the same (since it required its citizens to bank their savings with the government post-office).

The U.S. has done none of this. There’s no savings, no trust fund, nothing but IOUs payable by future generation. We’re bankrupt, they are not. QE2 (printing money) will punitively dilute all citizens, rather than those that chose poorly.

And by using government force to avoid (the painful) restructuring of society, and alter the expectations of the citizen and their enterprise, we are storing all that energy in a spring that when it breaks (again) will have even worse consequences than if we let the market rule, let prices adjust and the people respond to the changes in demand.

This entry was posted in Uncategorized. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s