Delete comment from: Captain Capitalism
Hi Gatmando,
No, I agree with your sentiment or sensing there is an artificial staving off of recession.
Like Ryan Fuller, I believe that recessions are just a natural and necessary function of any nimble and efficient economy. When you have such egregious misallocations of resources like Dotcom Mania and the Housing Bubble, you are guaranteed to have a recession. However, the levers of fiscal and monetary policy have been pulled to shield us from that. But in a kind of "mass cannot be destroyed, only moved or converted to energy" sort of physical principle, I believe the same for economics.
All we've done is temporarily suspend a recession or distributed the ill-effects across the nation. By exapnding fiscal policy we've just ran deficits and postponed paying the piper to future generations. With monetary policy, I think artificially low interest rates you're trying to save the economy by inducing consumer spending. Well, what income do we have to spend? None, so people borrow, again, racking up debt and postponing the effects of the recession into the future.
in this sense I see us a lot like Japan, staving off the inevitable and at the same time crippling our ability to grow at anything above 2.5% RGDP growth per year for a decade. I would surmise we'll be like France for a bit here.
Feb 18, 2008, 10:17:00 PM
Posted to Recession Time