Nobel economist Edmund Phelps gloomy on U.S. future: "Financial sector is useless"

Discussion in 'Economics' started by ByLoSellHi, Sep 12, 2009.

  1. http://news.theage.com.au/breaking-...mist-gloomy-over-us-future-20090912-fl3n.html

    Nobel economist 'gloomy' over US future
    September 12, 2009


    The massive debt being racked up by the United States to exit recession will thwart growth for decades while its "almost useless" financial sector needs deep reform, a Nobel economist said Friday.

    "I have a gloomy feeling about the American economy over the next couple of decades," 2006 Nobel Economics Prize winner, Edmund Phelps of the United States, said on Friday at Poland's Krynica Economic Forum, known as the Davos of the East.

    "I see the financial sector as almost useless in the promotion of prosperity in the United States," Phelps said. "It will have to be reformed and somehow, in principle competition, could do that over the decades but I don't think we can wait that long."

    Moves by the US Federal Reserve to improve liquidity on capital markets have raised the threat of rampant inflation more than anyone is willing to admit, he insisted.

    "The tremendous splash of liquidity created by the Federal Reserve is a threat - it does threaten inflation. Much more so than (US Federal Reserve chairman Ben) Bernanke acknowledges," he said.

    "The salvation of the US economy lies in raising up to whatever level we can the innovativeness of the economy and that will require reform of the financial sector, reform of the business sector and more transparent and more pro-business policies on the part of the government," the Nobel prize laureate told journalists.

    The massive debt now being accumulated by the United States on stimulus spending is a burden sure to thwart future investment in innovation and is harming the US's potential for future growth, Phelps insisted.

    "As the economy bottoms out and recovers to a degree, there is going to be a massive level of government indebtedness and that can't be sustained. It's not unsustainable, it can be sustained only at the price of high marginal tax rates which, for a number of years, will cause a great deal of innovative activity to be deferred," he said.

    Sparked by the meltdown of its financial sector, the US economy sank into recession in December 2007, in turn spurring the global economic crisis.

    With Washington having pumped about $US800 billion ($A927 billion) in stimulus into its economy most forecasters are now predicting that gross domestic product will to turn positive in the third quarter after contracting about one percent in the second quarter and a massive 6.4 per cent in the first quarter of 2009.

    © 2009 AFP
     
  2. Edmund Phelps of the United States, said on Friday at Poland's Krynica Economic Forum, known as the Davos of the East.
    -------------------------

    I'm glad I wasn't invited, sounds like a waste of time listening to this guy. He said nothing.
     
  3. Lethn

    Lethn

    *gasp* He bad man for telling the truth! Noes! The public can't be told about this because it would stop them from buying into their stupid ponzi schemes!
     
  4. Calling the financial sector "almost useless" is an understatement.
     
  5. What is very telling about such pundits is the lack of proposed solutions that will work....

    Here is what will work....and why....

    ................................................

    First...what is the optimum ?

    Second....what is it now ?
    ..............................................

    Now


    Now....is a certain spiral downward because of these items....




    Taxation Design

    Legal Design

    Individual Liberties

    ................................................

    Taxation Design


    The current design fails because the economy has changed....and the top tier cannot produce what is legally required and expected ....even if the rate is 100%....

    If 100% is not enough....is this not telling ?


    Required

    The current tax system has to be dissed....

    The current govt. has to diminish its size....

    The govt. take must be designed as to minimize output prices....such that finished domestic products can produce prices more favorable than
    BRIC prices....

    ..................................................

    Legal Design

    The current legal system does not allow for competitive pricing vs BRIC prices....

    Cumulative legal pricing....must be lower than that of BRIC's legal pricing....

    ......................................................

    Individual Liberties

    Because govt. refuses to downsize in order to allow competitive prices vs BRIC prices....by default the govt. has imposed the inability of its citizens to compete head on with BRIC prices....and one thus has to question why the govt. takes this position....

    Both individual/corp. taxes should be eliminated and replaced with a simple 15% consumption tax....Both state/fed will have to budget govt. based on this take....

    ...............................................

    Current govt.

    The current govt. is on track to impose the inability for its citizens to produce competitive prices vs BRIC prices....

    To date....there has been no evaluation as such....and nothing has been discussed or proposed regarding making the changes required in order to lowball BRIC prices....

    One has to question those with the podium....and thus why is it that it is their desire to diminish the US's ability to compete and thrive....

    ................................................

    In Addition....


    In addition is to take full advantage of the new exchange technologies that have become very efficient ....ie the BATS model ....that is currently trying to impose price transfer efficiencies in Europe....and has already accomplished efficiencies in the US....

    The exchanges need de-fragmenting....with utility type access...with information provided in wiki format....the technology is proven...and should be fully utilized....

    All price discovery should happen on this venue....and not by any other means...."everything out in the open"....

    There should be no taxation of any securities product of any type in the name of efficient capital....

    The country which offers this means will dominate in terms of housed corp. domiciles....

    ...............................................