Robbing Peter To Pay Paul Is Not An Economic Strategy.
And that is exactly what the recent string of government bailouts amount to: a short-sighted, desperate attempt to avoid paying the piper.
Why?
Because more debt is not the answer to our economic problems.
Capital, or value that we produce and don’t consume, is.
There are 2 ways to create capital:
1) Cut up the credit cards and start spending less than we currently make.
2) Increase production so that current increases in spending, in the long-run, are paid for.
If the productive capacities of American businesses, workers, and technology can exponentially increase our current level of economic production then our government’s current economic strategy isn’t as suicidal as it seems at first blush.
For example, we ran huge government deficits in the 1980s but the value created by the invention of the Internet economy vastly outstripped those deficits: by the late 1990s the American government was running a surplus.
Can we count on another spurt of productive excess from American enterprises and workers to pay for the debt we are piling up now?
It would seem as though current policy makers are banking on it: for all their faults, they know better than anyone that shifting debt from one sector of the economy to another and calling it “capital” doesn’t make it so.
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