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03/25/2010

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John Hemington

So Dave, being the pure observer and teller of truth you are, one should be willing to draw the obvious conclusion, there is no correct policy and therefore no hope, in somewhat stronger terms. Increased saving will destroy the economy in the short run and increased spending will destroy it in the long run. I suppose it's somewhat similar to asking, "would you rather die now or later"? The easy answer is, of course, later. But when referring to the possibility of societal collapse, it's a somewhat more difficult call to make. If a solution to the crisis is possible are we better off to crash the economy sooner rather than later? If it is not possible, as you seem to imply, does any of this matter at all? Just wondering.

You are correct in stating that virtually all of the talking heads in the economics trade have no clue relative to the reality of the situation on the ground; but, on the other hand, someone needs to explain it to the world with clear conclusions and realistic forecasts of what is to come. The finger in the dike theories of people like Krugman do not appear to be particularly worse than those who suggest that we can somehow save (deleverage) our way out of trouble. What is missing is some sort of miraculous savior which can spend to keep people working while they pay off their outrageous levels of personal and national debt. Unfortunately the Axial Age has past and miracles happen far less frequently these days.

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