So remind me once more … why does economic recovery in U.S. depend on GOVERNMENT?
Avoiding an American Lost Decade
Anthony Randazzo | BIG GOVERNMENT
In February of this year, I wrote a study (co-authored with Mike Flynn) about the lessons of the Japanese “Lost Decade.” At the end of the 1980s, Japan faced a very similar situation to ours: an asset bubble burst, the economy went into recession, and the financial sector stumbled. In that study we argued (as did others in separate publications) that if American didn’t properly learn the lessons of the Lost Decade, that we too would suffer a similar long night of economic malaise. Unfortunately, the warning has not been heeded.
Japan spent most of the 1990s screwing around with monetary policy, increasing taxes on its citizens, and spending trillions on stimulus projects. Sound familiar? The result was 10-years of stagnant economic growth, out of control unemployment, and national debt rising to double the rate of GDP, all while the rest of the world laughed at the nation that appeared to be returning to empire status. And that is where we are headed.
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We can’t have real recovery without the government out of the way. We need to clear the decks and get all the toxicity (of mortgages and otherwise) out of the system. This is what the market tries to do with recessions, but we haven’t let it yet.
And thus we are starting to look like Japan. Our best bet is to move towards the monetary and fiscal exits and understand what a recovery process means. For more, check out my study on “Avoiding an American Lost Decade” and the corresponding article in Reason magazine, “Turning Japanese.”
Continue reading this story … at the link above.
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