Johnc

How Do You Cure a Credit Bubble?

You are right but the devil is in the details. As an American who lives in Asia, I understand but am constantly amazed by the household balance sheet carried by most of my upper middle class friends in the US. How do we get the deleveraging without collapsing the whole system? The Austrian School is right (and crowing about it) but it will take years to reeducate the average American consumer to see the benefits of saving and productive investment. And with the likely tax regime under the next administration, I fear we will move further away from a simple and flattish tax policy that would point the way towards the deleveraging you correctly identify as the cure for our (US and global) ailments. Reverse Nixon price controls...very nicely put. History rhyming but not exactly repeating.