We baby boomers in America and Western Europe were raised to believe there really was a Tooth Fairy, whose magic would allow conservatives to cut taxes without cutting services and liberals to expand services without raising taxes. The Tooth Fairy did it by printing money, by bogus accounting and by deluding us into thinking that by borrowing from China or Germany, or against our rising home values, or by creating exotic financial instruments to trade with each other, we were actually creating wealth…
My takeaway is that U.S. and European politicians — please don’t laugh — are going to have to get a lot smarter and more honest.
To be the Regeneration, they’ll have to figure out how to raise some taxes to increase revenues, while cutting other taxes to stimulate growth; they’ll have to cut some services to save money, while investing in new infrastructure to grow economic capacity. We have got to use every dollar wisely now. Because we’ve eaten through our reserves, because the lords of discipline, the Electronic Herd of bond traders, are back with a vengeance — and because that Tooth Fairy, she be dead.
Join the conversation as a VIP Member