Monday, October 25, 2010

What would a "non-artificial" growth look like

There is a crowd of people out there, generally in the Austrian Economics/Hayek/Austerians/"Conservatives", etc. camp that keep complaining about how any growth that we have now is "Artificial" because of the massive government intervention in the economy. This keeps annoying the crap out of me as the alernative to this alleged Artificiality is never presented. So I'm going to piece together what I think this crowd wants to see. They want the economy to grow:
- Without any deficit government spending
- Without debt-financed consumer spending
- With short term interest rates at fairly high levels (4-5% would probably be good enough)
- With CPI at or near 0%
- With the dollar stable or appreciating against all major currencies

That the above is mathematically impossible and in many instances contradictory is, of course, absolutely beside the point.

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