Alan Greenspan: “We’re Running To A State Of Disaster”, by Tyler Durden.
Back in March, the former Fed chairman said that we’re in trouble because “productivity is dead in the water, and real capital investment is way below average because business people are very uncertain about the future.”
Greenspan went on to add that “entitlement programs are crowding out capital investment, and thus crowding out productivity.” …
Alan Greenspan was head of the US Federal Reserve, the most important economic office in the world, from 1987 to 2006.
“Entitlements are crowding out savings, and hence capital investment. Capital investment is the critical issue in productivity growth, and productivity growth in turn is the crucial issue in economic growth. We’re running to a state of disaster unless we turn this around.”
“This should be the central issue of the presidential debate. Unless and until we can rein in entitlements, which have been rising at a nine percent annual rate in the United States and comparable levels throughout the world, we are going to find that productivity is going to maintain a very low rate of increase”
The enlargement of the welfare state that Greenspan is now complaining about was enabled by the bubble in taxes, in turn caused by the bubble in money manufacture due to Greenspan’s policies:
Like so much of our current PC world, it is not, to use their favorite word, sustainable.
UPDATE: The central banks are now busy trying to engender moderate but controlled inflation, to whittle away the value of the huge debt the world has. (By the way, the winners will be the indebted; the losers will be everyone else, especially savers and people owed money.) They have tried ultra low interest rates and a little quantitative easing, without success. Next they will resort to helicopter money, special drawing rights, and/or raising the price of gold.
If they overdo it or lose control, this will happen in the West: It costs $150 to buy a dozen eggs in Venezuela right now (hat-tip Matthew).