The Future: What Must Be Done
Posted November 25, 2010
Understanding our starting point: the brink of disaster. The life raft analogy.
- What caused the Great Depression?
- 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.
- Food riots
- 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?
- Who benefits?
- 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
- Government investment