In this week’s column, entitled “What if there is no ‘answer’?” , Associate Editor Gil Smart writes:
“The Obama administration has confused the health of the big banks with the health of the overall economy. Romney and the GOP, meanwhile, think tax cuts will take care of everything. But that’s a supply-side solution to a demand problem.
“If neither of these is ‘the answer,’ what is? More stimulus, kicking the can even farther down the road?
“Maybe there isn’t a grand, single answer. Maybe the only answer is to deleverage, find footing on solid ground and build from there.”
WATCHDOG: The USA, as did much of the rest of the world, faced a similar problem of excessive sovereign debt overhang after the Second World War. Much of the solution came from economic growth and “deleveraging” at a steady rate of 2% ‘real’ inflation over two decades.
Contrary to the desire of the Obama Administration, over the past couple of years Republican controlled House of Representatives has imposed austerity measures that have slowed down recovery and generated deflationary pressures.
