David Malpass has written extensively on anticipating future policy direction regarding strategy of how the United States ought to manage it debt burden with National Competitors (read China). This is an extremely dangerous tract, fitting the demise of a great Republic; for specialists such as Timothy Geithner are not interested in the political or social impact of Federal Policies. As a specialist, he resists the Reaganite grasp of superior executives who understood the primacy of a holistic approach.
How do you get out of debt burdens?
Simple: devalue/destroy the currency.
Many classical economists understood that you cannot devalue or cut you way to prosperity; you either aggressively embody and defend pro-growth policies or die! Inside-the-beltway players continuously reveal a profound intellectual deficiency bordering on incompetence as they propose and defend disastrous policies. We are beholden to specialist’s with profound social, ethical and moral consequences! A deficit in leadership is on display for those with fortitude to divine an impending disaster.
Witness the frenetic activity that compels the specialist in his daily pursuit of prosperity: the diversion of dollars into commodities or foreign markets/currencies. THIS IS THE THIRD WORLD WAY OF ASSET ALLOCATION.
When will a President recognize a simple truth that dominates our contemporary financial climate: capital outflows to other National markets/currencies completely overwhelms any trade flows into the United States. This causes more job losses than cheap job creation.
No Nation can devalue its way to prosperity. We must have sound money and sound macroeconomic policies throughout the Executive, Congress and Federal Reserve. With stable money comes job creation! Witness the decline of the dollar in the 70’s/80’s, it coincided with Japan gaining manufacturing. We are about to witness this again with the impending rise of Brazil, Australia, China, Sovereign Wealth Funds in the Gulf region. What took decades is engendered in half the time. Are we ready to deal with the social impact of becoming a second rate superpower?
Why can’t we recognize that multinational companies are completely divorced from national economies! What gain is there when stocks rise and the dollar declines? Only the fee generating monstrosities of Wall Street win! Equity gain is cold comfort when currencies crash.
How do we win?
Simple: Maintain the following policies of the Reagan Revolution: tax reduction, tight fiscal spending, anti-inflation Federal Reserve policies. This creates the following:
1. Permanent job creation. Remember, the ultimate source of tax revenue is job creation.
2. Stable money.
3. Have the Treasury lengthen the maturity of its debt so as to protect the Federal Reserve from losses.
The lethal insight required for leadership is the recognition that other nations NOW have living standards that are growing faster than ours. When will get serious about whom we put in the White House?