This segment from CNBC's Kudlow & Company yesterday is well worth a watch, because in the heated debate that takes place, the panelists touch on many of the important issues that we have been writing about for months, and that we believe investors should understand.
The clip features host Larry Kudlow, First Trust Chief Economist Brian Wesbury, Bank of Montreal's Andy Busch, and Stifel Nicolaus Chief Market Strategist Joe Battipaglia.
The topic of the hour, what to do about the Greek debt crisis, led to a host of significant topics.
At about 4:35 into the clip, Joe Battipaglia asserted that "they need to raise taxes and cut spending," which is the "austerity" prescription countries are force-fed when the IMF shows up at their door.
We believe "austerity" is a code word for "well-meaning but anti-growth measures."
As we discussed in a recent post, growth is the answer, and the way to promote growth and unleash human creativity (which exists in Greece and the rest of Europe, just as it exists everywhere else that there are humans) is to provide a predictable environment with low tax rates and stable money (low or no inflation).
Similarly, the role of government stimulus came up, with Mr. Battipaglia's assertion at the 6:00 minute mark that "you cannot address the debt problem unless you go with aggressive stimulus, which is what the US did to get ourselves back on track."
Again, we believe that government "stimulus" is another well-intentioned but misguided drag on economic growth.
History very clearly demonstrates that government stimulus actually depresses growth, as we wrote back when the first stimulus plan was being introduced in the US House of Representatives in January of 2009.
As for the view that "aggressive stimulus" is what got the US "back on track," we pointed out back in February's post entitled "How your view of the crisis of 2008-2009 impacts your understanding of today's big issues" that the wrong mental framework for viewing the crisis and recovery would lead to very wrong conclusions about many other related major issues.
The arguments in the clip above are worth considering carefully, because the questions that are being raised over in Europe really deal with what we have called "The question of our time."
Raising taxes, relying on government "stimulus," and bailing out creditors with other people's money are all ways to shackle human innovation and entrepreneurial activity, and to drive out the growth that is the only real solution to Europe's current problems.
The good news is that, as we explain here, we do not believe that the current Greek crisis is really that big of a deal in the long run for investors who seek out growth and innovation where they can be found.
Let's hope that the jam that they are in causes more people in Europe -- and for that matter everywhere else in the world -- to realize that the anti-growth policies that have been promoted for so long are actually the heart of the problem, and to explore something that will actually work for a change.
Subscribe (no cost) to receive new posts from the Taylor Frigon Advisor via email -- click here.
For later posts dealing with this same subject, see also:
The clip features host Larry Kudlow, First Trust Chief Economist Brian Wesbury, Bank of Montreal's Andy Busch, and Stifel Nicolaus Chief Market Strategist Joe Battipaglia.
The topic of the hour, what to do about the Greek debt crisis, led to a host of significant topics.
At about 4:35 into the clip, Joe Battipaglia asserted that "they need to raise taxes and cut spending," which is the "austerity" prescription countries are force-fed when the IMF shows up at their door.
We believe "austerity" is a code word for "well-meaning but anti-growth measures."
As we discussed in a recent post, growth is the answer, and the way to promote growth and unleash human creativity (which exists in Greece and the rest of Europe, just as it exists everywhere else that there are humans) is to provide a predictable environment with low tax rates and stable money (low or no inflation).
Similarly, the role of government stimulus came up, with Mr. Battipaglia's assertion at the 6:00 minute mark that "you cannot address the debt problem unless you go with aggressive stimulus, which is what the US did to get ourselves back on track."
Again, we believe that government "stimulus" is another well-intentioned but misguided drag on economic growth.
History very clearly demonstrates that government stimulus actually depresses growth, as we wrote back when the first stimulus plan was being introduced in the US House of Representatives in January of 2009.
As for the view that "aggressive stimulus" is what got the US "back on track," we pointed out back in February's post entitled "How your view of the crisis of 2008-2009 impacts your understanding of today's big issues" that the wrong mental framework for viewing the crisis and recovery would lead to very wrong conclusions about many other related major issues.
The arguments in the clip above are worth considering carefully, because the questions that are being raised over in Europe really deal with what we have called "The question of our time."
Raising taxes, relying on government "stimulus," and bailing out creditors with other people's money are all ways to shackle human innovation and entrepreneurial activity, and to drive out the growth that is the only real solution to Europe's current problems.
The good news is that, as we explain here, we do not believe that the current Greek crisis is really that big of a deal in the long run for investors who seek out growth and innovation where they can be found.
Let's hope that the jam that they are in causes more people in Europe -- and for that matter everywhere else in the world -- to realize that the anti-growth policies that have been promoted for so long are actually the heart of the problem, and to explore something that will actually work for a change.
Subscribe (no cost) to receive new posts from the Taylor Frigon Advisor via email -- click here.
For later posts dealing with this same subject, see also:
- "Lower tax rates stimulate growth" 07/27/2010.
- "European debt issues and the primacy of growth" 11/08/2010.
- "Another wake-up call" 11/29/2010.
- "The question of our time, continued" 03/14/2011.
- "The silver lining to the S&P change in outlook" 04/19/2011.
