John Lounsbury

The Real Problem? People Are Scared to Spend

Michael - - -
Good article. I am surprised you didn't say "the FIRE economy has gone up in smoke".

Doug Poretz - - -
According to the National Bureau of Economic Research, we are in a recession. The recession started in December, 2007, twelve months ago. The two consecutive quarters of declining GDP is a common result of recession, not the defining event.
That specific point aside, the rest of your comment is excellent. There are new societal, technological and economic paradigms, as you point out, and we have yet to appreciate how these will aggravate and mitigate the current crisis. For the intellectually curious, this is a great time to be alive. I just hope I am one of those who can afford the curiosity and hope that our society will survive and prosper.

Derryl - - -
I always enjoy the intellectual complexity of your comments. The problem you describe is real, but your solution is Draconian. How can the creation of some sort of "new money" not devalue the "old money" and be extremely inflationary? You argue to the contrary, but I am skeptical.
Why not repay the debt by evolving to a new national "business plan" that emphasizes production more than consumption and earn the repayments? I would much prefer such a solution to one that is simply more financial instrument manipulation. (I include paper money as a financial instrument.) Can our economy activity change in the following ways?
1. Produce more things that improve productivity (information technology, communications, machines using less (or cheaper) energy, new energy technologies, etc.)
2. Produce more things that reduce future costs (preventive health care, more effective education, environmentally cleaner processes, more efficient transportation, lower cost and more efficient energy distribution, etc.
3. Produce things that increase the circulation of dollars domestically (higher employment) and repatriate dollars held overseas via increased exports. These would include activities suggested in 1. and 2.

Can we replace Michael's burned out FIRE economy with a PERFECT economy? That would be Productivity and Employment Revival for Future Economic Cost Transformation.