Well the results are in. Neither the “pump priming” of the Obama administration or the “austerity” campaigns of the EU members have delivered a satisfactory recovery from the “Great Recession.” Both here in the USA and abroad in the EU, but even further afield, the future looks grim.
The Europeans face a major financial meltdown if they continue to forgo a EU wide program to fend off disaster. The piecemeal approach has led no where. They must adopt a EU wide response starting with a Eurobond as the base.
Our situation,while less urgent, is more complex. Clearly massive Federal intervention has been able to stabilize the economy but at a level well below what we enjoyed until 2007. To regain those economic heights we need to come up with more powerful tools and programs.
I know the Democrats insist that we have to redistribute the national income away from concentration in the hands of the “Fat Cats” and into the hand of “Joe Six-pack” or “Suburban Sally” who sips Pinot Grigio. I oppose redistribution of income via Federal intervention, i.e. tax higher and use the higher income to spend on Federal programs. I still believe that the most efficient way to spend income is to leave it in the hands of those who earn it.
But I see the Republican plan as too long on theory and short on action. Leaving more funds in the hands of small business to continue to act as the innovative lead in higher production sounds great on paper. But we have seen little action so far, e.g. the Bush Tax cuts have not stimulated massive small business innovation.
I continue to insist that the only way to get back to the high level of economic success we had until 2007 is to return to the “mountain of debt” that funded consumption, which in turn spurred production. I can hear the moans now, “Why return to the failed policies that got us where we are today?” But I would remind you that loan creation and distribution now is guarded by the Frank-Dodd legislation that makes this transparent and more open. I believe that we can recreate the “mountain of debt” on a more solid base made more solid by the Frank-Dodd Law. Any other solution will be too little and too late.