"We Are Approaching The Economic Singularity"

[applegrove]

We Are Approaching The Economic Singularity

by John Mauldin at Business Insider

http://www.businessinsider.com/we-are-approaching-the-economic-singularity-2014-2

"SNIP.....................................



Deficit spending can be a useful tool in countries with a central bank, such as the US. But at what point does borrowing from the future (and our children) come to be seen as a failure to deal with our own lack of political will in regards to our spending and taxation policies? There is a difference, as I think Hyman Minsky would point out, between borrowing money for infrastructure spending that will benefit our children and borrowing money to spend on ourselves today, with no future benefit.

The deficit has to be controlled, of course. To continue on the current path will only feed our Black Hole of Debt even more "mass," making it that much harder to escape from. But to try and power away (cutting the deficit radically) all at once will blow the engines of the economy. Suddenly reducing the deficit by 8% of GDP, either by cutting spending or raising taxes, is a prescription for an almost immediate depression. It's just basic math.

As we outline in Endgame (shameless plug), each country has to find its own path. But it's clear that Spain, like Greece, is simply going to have to default on part of its debt. So will Ireland and Portugal. Japan will resort to printing money in amounts that will boggle the imagination and terrify the world, as they finally come to grips with the fact that they must deal with their deficit spending.

The Glide Path

Indulge us for a moment as we think about our own country. The United States still has the chance to pursue what we call the "glide path" option. We can reduce the deficit slowly, by say 1% a year, while aggressively pursuing organic growth policies such as unleashing the energy and biotechnology sectors, providing certainty to small businesses about government healthcare policies, reducing the regulatory burden on small businesses and encouraging new business startups, creating a competitive corporate tax environment (a much lower corporate tax with no deductions for anything, including oil-depletion allowances), implementing a pro-growth tax policy, etc. We can balance the budget within 5-7 years. If the bond market perceived that the United States was clearly committed to a balanced budget, rates would remain low, the dollar would be stronger (especially as we become energy independent), and we would steam away from the black hole. If something like Simpson-Bowles could be accomplished, with an even more radically restructured tax policy, it would be enormously bullish for the United States in particular and for the world in general. Healthcare is clearly the challenge, but a compromise can be crafted, as has been demonstrated by the several bipartisan proposals that have been sponsored by conservative Republicans and liberal Democrats. The key word is compromise.



....................................SNIP"

[applegrove]

1. Some food for thought. And why doesn't the GOP let Obama spend on infrastructure? My guess is

they like the employers market where workers are desperate and will vote out unions, reducing wages and increasing profits.

[Notafraidtoo]

3. Yes!

That's it in a nutshell really, labor is just a commodity to investors. Business's give to think tanks to lobby for them so that investors can get large temporary gains off workers. This will crash the economy one day but the ones benefiting now don't care.

This is the flaw in markets, they are only self correcting because they destroy themselves but in the end they just repeat the cycle. The key is to stop this cycle and keep it consistent but how do we compete with these powerful think tanks unleashed on such a gullible public.

[reformist2]

2. It's going to end either in massively higher taxes on the rich (Dem sol'n), or default (Repug sol'n)

[JDPriestly]

4. You can't tax people who are earning minimum wage and barely able to eat and have a roof

over their heads. And you can't tax people to the point they cannot afford to educate themselves or their children, not if you want to pay down the debt.

Sorry. But paying off the debt is the job of the rich. With a minimum wage as low as we have today and the median salary stagnant for many years, the only people who have the money to pay it off are the rich.

Taking insurance companies completely out of the health care picture would reduce the cost of health care enormously. Single payer health insurance would help America pay off the debt.

Simpson-Bowles was a failure. Cutting Social Security or reducing the expenditures on the social safety net cannot be done. Those benefits are already oppressively low.

Cutting the salaries of members of Congress down to the median in the country might be a good start for paying off the national debt. It would wake up a lot of members of Congress to the struggle that ordinary American families have every day.

[Fumesucker]

5. It's interesting that this paragraph uses so many buzzphrases

And the last sentence is absolutely hilarious.

Indulge us for a moment as we think about our own country. The United States still has the chance to pursue what we call the "glide path" option. We can reduce the deficit slowly, by say 1% a year, while aggressively pursuing organic growth policies such as unleashing the energy and biotechnology sectors, providing certainty to small businesses about government healthcare policies, reducing the regulatory burden on small businesses and encouraging new business startups, creating a competitive corporate tax environment (a much lower corporate tax with no deductions for anything, including oil-depletion allowances), implementing a pro-growth tax policy, etc. We can balance the budget within 5-7 years. If the bond market perceived that the United States was clearly committed to a balanced budget, rates would remain low, the dollar would be stronger (especially as we become energy independent), and we would steam away from the black hole. If something like Simpson-Bowles could be accomplished, with an even more radically restructured tax policy, it would be enormously bullish for the United States in particular and for the world in general. Healthcare is clearly the challenge, but a compromise can be crafted, as has been demonstrated by the several bipartisan proposals that have been sponsored by conservative Republicans and liberal Democrats. The key word is compromise.

[LuvNewcastle]

6. Judging by the rest of the paragraph, it's obvious to me what the writer means.

Kowtow to GOP demands and kill any kind of public healthcare. Look at the solution for balancing the budget. It's all about tax cuts and gutting regulations. We've tasted this shit pie a million times and it never gets any sweeter.

[applegrove]

8. Single payer is the only thing that will dramatically cut costs. I agree.

Don't know if the author meant that.

[magical thyme]

7. what a pile of self-promoting crap...

and is the author so hapless that he is not aware that deleted emails are in order received. I.e, the 200 emails he accidentally deleted are not indiscriminately mixed into 50,000 other emails in his deleted file?