Are
we fighting the last Depression with this stimulus bill, when our situation is
quite different? In 1929 we had a huge bubble of factory building,
leaving us with tremendous idle capacity. People were saving a great deal
and investing it in stocks which collapsed.
Today
we have borrowed massively against assets which has dropped a lot in
value. Our economy has been consistently stimulated within an inch of its
life. Perhaps more stimulus is not the answer.
Perhaps
what we need is a massive savings plan. Cut withholding taxes for a few
years – it is broad based with a bias towards the low end of the scale,
it helps businesses which hire or keep their employees, and people will save it
– which is a good thing. They will pay down their mortgages and
their credit cards and cash will flow into banks as equity, helping to repair
everyone’s balance sheets.
From
a base of fiscal soundness we are better able to make the transition to an
economy featuring more savings and exporting and infrastructure greening/modernizing
and less consumption. The economy we had, based on borrowing against our
houses to consume a lot, is not coming back; at least not anytime soon.
We need to move towards a new economy which is waiting to be born.
-Mike
Oliker
Albuquerque,
NM
| Free forum by Nabble | Edit this page |