mrstickball said:
richardhutnik said:
RedInker said:
America needs to pay its debts and start living by its means. Otherwise America will be the new Greece. |
The talk of the Fiscal Cliff has to do this. Moves that would end up pushing in that direction are saying they will have a net negative impact, as in budget cuts and forced raising of taxes. Thing is that most of the world is living beyond its means at this time. It has been built on debt, and the levels of growth aren't able to keep up with the debt. The compounded effect of interest eventually does come do. The issue seen is that, if you end up having people systemically living within their means, you will end up having entire industries vanish and that causes contraction to happen and it snowballs. It needs to be done, but then you start to have things along the lines of the paradox of thrift. I say it is valid, although I have strong disagreements with Keynesians who think aggregate demand is ALL that matters.
The thing is also, while the debts get paid down, you have sluggish economics. Also, keep in mind that, in a debt based currency economy, if all debts are paid, there is no longer any currency floating around in an economy. Think about an economy without currency for a minute.
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That's why I think deregulation is key. If and when we ever have to live in our means, it will contract our economy. If markets and industries are deregulated, then the hope/goal would be that industries and businesses can invest in new sectors to mitigate the damages.
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Deregulation as in simplifying the rules, or cutting enforcement of rules (or both)? A problem seen now is one totally unregulated market (derivates) is currently a time bomb waiting to go off. Saying deregulation alone isn't a miracle, when people can leverage and take down the entire economy, as they did. This doesn't mean part of the solution couldn't be simplifying the rules. Making it easier to get going helps. But, unless people will take responsibility to proactively prevent issues, it doesn't happen. In any given industry, there is always the push to increase risk taking, to get bigger pay outs, and people doing these have hubris to think that they won't fail.
