http://www.politico.com/news/stories/0109/18068.html
Quotes a New York-based hedge fund manager, Andrew Schiff: "Our standard of living needs to come down to the point where it can be supported by organic output."
Dang, that's pithy and totally true. I've written thousands of words for months now, usually including the word "deflation," groping for exactly that point.
I know that several of my friends disagree quite strongly with this view. What he's really saying is that we've been supplementing our consumption by importing spending power in the form of personal and public indebtedness. We've quite rationally been taking advantage of the fact that other countries demand an exceptionally low rate of interest for lending money to us.
Now, the chain has run out on low-cost private indebtedness. There's nothing left in that tank. But if anything, public indebtedness has become even more attractive as long-term interest rates remain preternaturally low. As a result, we're quite rationally going to suck on that tank until it runs dry too.
The only way to overcome behavior that's short-term rational and long-term destructive, is to be king. If I were king of the US, I'd take Schiff's advice and start looking for ways to make the US economy radically more productive. Eliminating the business income tax and the capital gains tax would be awesome places to start. Outlawing unions and dismantling the regulatory state would be next
Quotes a New York-based hedge fund manager, Andrew Schiff: "Our standard of living needs to come down to the point where it can be supported by organic output."
Dang, that's pithy and totally true. I've written thousands of words for months now, usually including the word "deflation," groping for exactly that point.
I know that several of my friends disagree quite strongly with this view. What he's really saying is that we've been supplementing our consumption by importing spending power in the form of personal and public indebtedness. We've quite rationally been taking advantage of the fact that other countries demand an exceptionally low rate of interest for lending money to us.
Now, the chain has run out on low-cost private indebtedness. There's nothing left in that tank. But if anything, public indebtedness has become even more attractive as long-term interest rates remain preternaturally low. As a result, we're quite rationally going to suck on that tank until it runs dry too.
The only way to overcome behavior that's short-term rational and long-term destructive, is to be king. If I were king of the US, I'd take Schiff's advice and start looking for ways to make the US economy radically more productive. Eliminating the business income tax and the capital gains tax would be awesome places to start. Outlawing unions and dismantling the regulatory state would be next
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