Too much of the economic commentary I’ve been reading seems to assume that once a burst of deficit spending turns the economy around we can quickly go back to business as usual.
In fact, however, things can’t just go back to the way they were before the current crisis.
Something new could come along to fuel private demand, perhaps by generating a boom in business investment. But this boom would have to be enormous ...
A more plausible route to sustained recovery would be a drastic reduction in the US trade deficit. But it will probably be a long time before the trade deficit comes down enough to make up for the bursting of the housing bubble.
It may take a lot longer than many people think before the US economy is ready to live without bubbles.
From a year ago, Eric Janszen:
That the Internet and housing hyperinflations transpired within a period of ten years, each creating trillions of dollars in fake wealth, is, I believe, only the beginning. There will and must be many more such booms, for without them the economy of the United States can no longer function.
From last month, Peter Schiff:
I think the only sectors of the US economy that are going to improve are going to be those that are related to exports -- manufacturing, mining, energy, agriculture, commodities-related businesses. I think the slowdown in the global economy will be short-lived. But I think the US depression is going to be with us for a long time.