Wednesday, October 6, 2010

What's wrong with this picture?

From The Washington Independent
A Decade of Slow Growth, Followed by
Two Decades of Slow Growth

By Annie Lowrey 10/5/10 10:58 AM

Northwestern economist Robert Gordon brings the gloom:

According to Gordon’s research into the long-term determinants of growth, America’s next two decades are going to be disappointing. He predicts that between 2007 and 2027, gross domestic product per capita will grow at the slowest pace of any 20-year period in U.S. history going back to George Washington’s Presidency...

Why? The Baby Boomers will retire, meaning millions of them will stop contributing to the economy and will start living off of state programs like Social Security, disability insurance and Medicare. No technological revolution, like the internet, is on the horizon to juice growth either.

What's wrong with it? Where do you want to start?? Our economy has been slowing for 40 years. Now Robert Gordon predicts 20 more years of even slower growth.

Then what? the article doesn't say. But you can imagine things may just slow down even more. This trend isn't gonna change by itself.

That's item one. Item two: The blame is placed on my parents, and the parents of other baby-boomers, for having too many kids all in a bunch, and having too few thereafter. And the rest of the blame is placed on technology, for not being there when we need it.

These are only distractions.

When money is out of balance, everything it touches goes bad.

"There cannot, in short, be intrinsically a more insignificant thing, in the economy of society, than money ... and ... it only exerts a distinct and independent influence of its own when it gets out of order." - John Stuart Mill, quoted by Milton & Rose Friedman in Free to Choose, Chapter 9, p.249.

When we choose to use economic policy to fix the monetary imbalance, things will turn around very quickly.

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