It’s a cliche — but true — that a huge obstacle to a stronger economic recovery is the lack of confidence in a strong recovery. If consumers and businesses were more confident, they would be spending, hiring and lending more freely. Even a slight relaxation might do wonders for the subpar nature of the expansion, highlighted by May’s meager 54,000 increase in payroll jobs. Instead, we’re deluged with reports suggesting that, because the recession was so deep, it will take many years to regain anything like the pre-crisis prosperity.
“It’s a cliche — but true — that a huge obstacle to a stronger economic recovery is the lack of confidence in a strong recovery. If consumers and businesses were more confident, they would be spending, hiring and lending more freely.”
This is delusion. It is not confidence that holds back the economy. It is debt that holds it back. Piling on more debt only makes it worse. America is going to be Japan #2.
Modern economics is a fraud. The fact that economists don’t know what to do right now says everything. Here are some rules to help you understand better:
1. Problems only get worse without pain – financial loss.
2. Eliminating pain takes us back to #1.
3. There is no way to undo prior damage without pain.
People have to get burned before things will get better. That changes behavior and eliminates stupid people from positions of power. Right now America is on pain killers. That means things aren’t going to get better.
The solution is to create an “economic break” every fixed number of years. This is modeled after democratic elections every fixed number of years. In democratic elections, poor leaders are tossed out by the people at fixed intervals. An economic break would involve debt forgiveness at fixed intervals. Poorly managed companies will automatically get burned at fixed intervals.