To prevent a Simpson-Bowles induced depression some form of non-fiscal stimulus would be needed that could provide excess growth to the U.S. economy on the order of 3% per annum over 5 or more years. more »

There is no magic bullet for stimulating the small business part of the American economy. But there are millions of new entrepreneurs who have the energy and creativity to provide just that stimulation -- ironically because at the moment they are the very epitome of Coolidge's 1925 era Americans whose "chief business" was business. What they need is a simple combination of available credit and a tax code that allows for the untaxed accumulation of modest levels of working capital. The proper incubation of those entrepreneurs could go a long way towards providing the additional 3% annualized growth needed to forestall a Simpson-Bowles induced depression. Editor's note:  This is the sixth in a series of essays which discuss both historical perspectives and current challenges to solving debt crises.  The previous articles are listed (Related Articles) at the end of this one. While s… more »

The problem facing most main-stream economists (and certainly the ones at the Federal Reserve) is that their Keynesian textbooks have taught them that at some "tipping point" the growth rates of the numerator and the denominator of that ratio become inexorably linked, making the ratio unfixable through normal (i.e., relatively painless) means. more »

There are solutions to the current debt crisis that are unthinkable given the present "regime" -- the current composition of the U.S. congressional, executive and judicial branches of government. We can classify those changes into two broad categories: those that conceivably could be initiated after only one more electoral cycle by extending recent political trends, and those that would require a more radical political upheaval on the scale of Andrew Jackson's or Franklin Roosevelt's election. more »

For at least a couple of decades the U.S. government and central bank have pursued policies that minimize pain over the short term while deferring the fiscal consequences to some unspecified later date. more »