Quote:Yes nail, where will it end?. Now we have the liberal premiers, planing on sacking thousands of public servants. All well and good I hear the liberals say, in order to cut debt. Except where are these people supposed to go?. No one really thinks of that, do they?.
Has Bill Bonner all the answers?
Regards,
Bill Bonner
for The Daily Reckoning Australia
That's what's nice about living in Argentina," said Rob, a colleague. "Everything is so obvious. They don't have these LTRO and the Twist programmes... They're much more blatant... and in-your-face about it. It's like a machine with the housing removed. You can see the gears turning. You can see how it really works.
"They literally print money. They need money to pay government workers. So they print pieces of paper. That's why the inflation rate in Argentina is already about 35%... and it's why the country is headed for another crisis. You can't have inflation rates that high without destabilising the economy. It should start breaking down soon."
Will this money printing by the Argentinians make their economy work better? Will the Argentinians be richer, happier, more prosperous as a result?
You don't think so? What's the matter with you? You must not have studied economics!
I reckon there would be a higher chance of success if a country did three or four things:
1. Slash government spending (eg reduce government payrolls by 20% over three to five years).
2. Cut personal and business taxes (and fund the short-term shortfall with debt).
3. Slash regulation that gets in the way of business and everyday life (employment law, licensing, reporting, tax reporting, health and safety etc etc). Give existing businesses more time to focus on making money. Make it easier for new entrepreneurs to get started. Improve the chances of private sector growth.
4. Keep interest rates low while the debt burden is worked off."
Unfortunately steps 2 and 3 are mostly or completely non-existent or even going the other way. And step 1 is non-existent in the US, which gives the illusion of a stronger economy in the short term, but the debt continues to grow at a scary rate.
The key to getting out of this global mess is private sector growth, not governments continuing to suck money out of the private domain.
The biggest nonsense I,ve ever read, considering the youth unemployment in the world.