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Sunday, July 10, 2011

Why Not Rob the Future of its Higher Standard of Living?

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Dr. Brod: (UNCG Economist)

Why not leave our children and grandchildren with debt? Why do they get to be the special generation with no debt? Has helicopter parenting progressed so far that we can't even run a deficit to save the economy? Why do our hearts ache more for future generations than they do for the millions of people who are unemployed right now?

Why?

Because it shifts real loss to subsequent generations for the mirage of a repaired economy today. As Dr. Brod has said in reference to the recession of 1937 which was second only to the current recession in severity after the Great Depression:

...what we saw in the 1930s is that fiscal stimulus worked while it was tried, and didn't work when it was pulled back.

In other words we traded real debt for no lasting gain. Keynes failed, FDR failed. The nation suffered.

We saw it again with the conclusion of WWII which was followed not by boom but by bust in the recession of 1945.

And in the most glaring example there is Japan which continuous the feel good Keynesian stimulus that has resulted not in boom, but a full generation of economic stagnancy. In Japan we see firsthand the real loss that was transferred to the unborn when Japanese leaders chose Keynesian solutions.

Those unborn are now young adults enduring the fiscal abuse metered out by elders who asked themselves:

Why not leave our children and grandchildren with debt? Why do they get to be the special generation with no debt?
and chose poorly.



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