Ken Nelson

Forbe’s “Dr. Doom”, aka Nouriel Roubini, wonders how we get out of this mess.  How, he asks, do you exit the Ponzi scheme that our politicians have placed our economy into?

Ponzi schemes have a way of ending unhappily. To get out of the Ponzi trap, governments will have to raise taxes, or cut spending, or monetize the debt–or most likely do some combination of all three.

I’ve no doubt that Obama would love to raise taxes. And I’m sure he will eagerly monetize the debt. I’m dubious that the spending, or more precisely the adding of spending obligations, will be cut.  Obama, in fact, wants to add trillions in spending.

So the Ponzi scheme continues.  And the end won’t be happy.

Better would be to restrain spending and to cut taxes, and especially the progressivity of the tax rate.  Then sit back and watch yourself grow out of the debt.

That, however, will not be done because it makes to much sense and it doesn’t help Democrats maintain their constituency spending.