Are we fighting the last Depression with this stimulus bill, when our situation is quite different? In 1929 we had a huge bubble of factory building, leaving us with tremendous idle capacity. People were saving a great deal and investing it in stocks which collapsed.
Today we have borrowed massively against assets which has dropped a lot in value. Our economy has been consistently stimulated within an inch of its life. Perhaps more stimulus is not the answer. Perhaps what we need is a massive savings plan. Cut withholding taxes for a few years - it is broad based with a bias towards the low end of the scale, it helps businesses which hire or keep their employees, and people will save it - which is a good thing. They will pay down their mortgages and their credit cards and cash will flow into banks as equity, helping to repair everyone's balance sheets. >From a base of fiscal soundness we are better able to make the transition to an economy featuring more savings and exporting and infrastructure greening/modernizing and less consumption. The economy we had, based on borrowing against our houses to consume a lot, is not coming back; at least not anytime soon. We need to move towards a new economy which is waiting to be born. -Mike Oliker Albuquerque, NM
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