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“OR B)we decide we will try to grow our way out”
That statement weirdly implies a country’s economic growth is based on “deciding” to grow. What has Obama/Geitner/Bernanke been doing these last 4 years? The trillions for various stimulus programs, anyone?
Have you checked Japanese results over these last two decades? Japan’s economy was once the envy of the world. Do you think Japan’s pols haven’t been “deciding and deciding” FOR economic growth all this time yet always failing? Now their debt is absolutely staggering, and they still can’t get to growth.
The US should heed Japan’s mistakes. Both countries faced, and still face, recession due to their collapsed financial bubbles. The lesson from Japan is govt. help and propping up to avoid the painful consequences just stagnates the economy long term and does not help us “grow our way out of the mess”, rather it keeps labor and capital on the side while all eyes remain on the Central Planners.
Want to add the following… Japan’s problem is now become a “No Exit” problem. Their unemployment last I check, is only about 4.5%, however young people are earning much lower wages than their predecessors, and many of them can’t afford to leave their parents’ home and start their own lives. Govt. debt exceeds 240% of GDP due to many stimulus attempts. Interest rates remain at zero, essentially forever, because they would not be able to afford to service their debt. Therefore, due to near zero interst, pensions plans can’t earn enough to keep up with payments to retirees, so the Japanese become even more indebted to keep up with payments. No matter what, govt. can not afford to pull out of their economic role. They are now locked into it, forever or until a revolution comes. As their youth are becoming impoverished — thanks in large part to central planning — got to wonder about what would have happened if they had taken their pain, early on, and not let their govt. keep the status quo alive.
There is even some recent feeling in Japan that married women shouldn’t work. “If the husband works, the wife should not.” …that sort of thing. Talk about going backwards.