The Future: What Must Be Done

Understanding our starting point: the brink of disaster. The life raft analogy.

  • What caused the Great Depression?

Policy Options

  • Cut government spending now
  • Maintain current levels of government spending
  • Increase government spending to restructure the economy
  • Quantitative Easing: Economic management through money creation

The Bad Future: large budget deficits and eventual large scale monetization of the debt.

  • Protectionism
  • Hyperinflation
  • Food riots
  • Deflation
  • Depression
  • War
  • The Fall of Rome

The Good Future: Restructuring America, Rebalancing the global economy

  • Learning from Japan’s mistakes
    • Large deficit spending is unavoidable when a great bubble pops.
    • The deficit will be much easier to finance than expected.
    • Don’t waste the money building bridges to nowhere.
  • $3 trillion would resolve the crisis and lock in a new American Century
  • How it could be financed:
    • With the pool of bubble money plus cash flow (flow of funds); spare financial capacity.
    • Making to most of the opportunities The Dollar Standard affords the US.
    • Printing money as a last resort. Given globalization’s impact on wages and inflation it is possible.
  • Creating miracles
  • What’s good for America is good for the world.

A five to ten year window of opportunity exists to resolve this crisis

  • The deficits can’t be financed forever. Budget outlook.
  • Impediments to action
    • Incorrect conventional “wisdom”
    • Vested interests
    • Muddled economic theory
    • The loss of nerve
  • Why we can’t go back the way we came. We are not starting from a laissez-faire Garden of Eden.

A call for reform

  • What is the philosophy guiding US economic and political economy?
    1. Who benefits?
    2. Who loses?
  • Budgetary reform
  • Monetary reform
  • Trade reform
  • Financial sector reform: credit is dangerous
  • Political reform
  • Avoiding A Third World America

Policy tools for a new century

  • A global minimum wage
  • SDRs
  • Government investment

No comments have been made yet.

Leave a Reply

Your email address will not be published. Required fields are marked *

Subscribe To Richard Duncan's free blog.

Subscribe To Richard Duncan's free blog.

Subscribe to receive the latest economic news and analysis from Richard Duncan.

You have successfully subscribed to Richard Duncan's blog.