Lower taxes, retain a Fed chairman predisposed to drown any emergent crisis or volatility in an ocean of "liquidity" (low rates on money, made liberally available). Deficits - they will take care of themselves in time, with growth. Loosen regulations to promote financial innovation.
Not an unreasonable platform. Reagan did it. Bush I was forced by the bond markets to raise taxes. Clinton lived in fear of the bond markets (and Newt Gingrich) and did not overspend. Clinton did a big chunk of the derivatives dereg with Bob Rubin. These guys cleaned up LTCM, the Asian contagion. Bush inherited a burst stock bubble (not as bad as a burst debt bubble) and a serious military conflict landed in his lap. Deficits could wait.
Unfortunately, the distortions and gamesmanship (and moral hazard) which crept into the system had made the playbook of the previous twenty years before GWB a disaster for the next ten.
But most of this is visible only in retrospect.
The political climate was so noisy - I recall dismissing economic doomers in 2005 (like Peter Schiff) as BDS sufferers. I'm sure the people screaming about Keynesian economics being bankrupt are dismissed as racists. This is all very disheartening.
The reality is that the crisis we face - a fiscal gap of about 14% on an ongoing basis - has the potential to destroy the country. It's a humbling thing, or should be.
The reality is that the crisis we face - a fiscal gap of about 14% on an ongoing basis - has the potential to destroy the country. It's a humbling thing, or should be.
Bush followed a familiar playbook economically.
ReplyDeleteLower taxes, retain a Fed chairman predisposed to drown any emergent crisis or volatility in an ocean of "liquidity" (low rates on money, made liberally available). Deficits - they will take care of themselves in time, with growth. Loosen regulations to promote financial innovation.
Not an unreasonable platform. Reagan did it. Bush I was forced by the bond markets to raise taxes. Clinton lived in fear of the bond markets (and Newt Gingrich) and did not overspend. Clinton did a big chunk of the derivatives dereg with Bob Rubin. These guys cleaned up LTCM, the Asian contagion. Bush inherited a burst stock bubble (not as bad as a burst debt bubble) and a serious military conflict landed in his lap. Deficits could wait.
Unfortunately, the distortions and gamesmanship (and moral hazard) which crept into the system had made the playbook of the previous twenty years before GWB a disaster for the next ten.
But most of this is visible only in retrospect.
The political climate was so noisy - I recall dismissing economic doomers in 2005 (like Peter Schiff) as BDS sufferers. I'm sure the people screaming about Keynesian economics being bankrupt are dismissed as racists. This is all very disheartening.
The reality is that the crisis we face - a fiscal gap of about 14% on an ongoing basis - has the potential to destroy the country. It's a humbling thing, or should be.
The reality is that the crisis we face - a fiscal gap of about 14% on an ongoing basis - has the potential to destroy the country. It's a humbling thing, or should be.
ReplyDeleteI don't find it humbling. I find it terrifying.
And your comment was fascinating, lewy. As usual.