The problem with the credit crisis has been the desire of many to consume today and pay tomorrow. The banks feed on this desire by consumers. The government fostered this desire by saying that everyone should have a home. For derivatives you can have the current income today for risks that you may have to pay for tomorrow. For the government you can stimulate today for debt that will have to be paid tomorrow. The time value of money problem cannot be ignored.
How does all of this get paid for? The answer is what has not been discussed with government policy, growth, innovation, and increases in productivity. If you want to pay for health care, we will have to grow the economy. You want to pay-off the stimulus of the economy, we will have to grow the economy. If you want housing to stabilize and wealth to return, we have to grow the economy. So what are the current policies which promote growth? Not the works projects but innovation and ideas for productivity enhancement. Any dollar of government spending is not the same.
To grow you may have to forgo consumption today to prepare for tomorrow. The time value of money problem.
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