Embrollo económico

De PG, mi economista favorito:

Global stock markets are down in large part because the world is concerned that the US economy is in a recession and our politicians and policymakers are clueless in the face of this predicament. The Bush administration and the presidential hopefuls are all talking about fiscal stimulus plans that mostly involve taking money from one person's pocket and putting it in another (e.g., tax rebates). You can't make an economy stronger by funding one man's extra spending with money taken by taxing or borrowing from another man. Policies oriented to increasing consumer demand have no ability to expand the economy, otherwise (as Jude Wanniski used to say) we could spend ourselves to prosperity. Meaningful stimulus has to involve a permanent change in the incentives to work and invest, since that expands the output/supply side of the economy; ultimately, only rising incomes can fuel rising spending. In this article, Richard Rahn talks about a simple fix to the tax code which could make a world of difference: indexing capital gains for inflation. What politician, even the die-hard Democrats who hate it that the rich are getting richer, would want to argue in an election year against tax reform that is fundamentally fair, would help everyone, and would boost the economy? Word is that the Bush administration is considering precisely this as part of a fiscal stimulus package. The idea first cropped up in the early 1990s, but was abandoned. Now would be a great time to revive it. With all the pessimism out there it's about time somebody did something positive.

This is especially timely because with the Fed's latest effort to boost the economy by lowering interest rates, inflation risk is rising. We've already seen inflation rise from a low of 1% in 2003 to 3-4% currently, thanks to Alan Greenspan's misguided decision to push interest rates down to 1% in 2003. That not only contributed to the housing price bubble, but also drove the dollar down and boosted commodity and gold prices. Since it became obvious last summer that the Fed would be forced to lower rates to stem the losses from subprime lending, the dollar is down over 5% and is now at an all-time low, and gold is up 35% to almost $900/oz. Lower interest rates may help fix the subprime crisis by slowing and limiting the decline in home prices, but only at the cost of higher inflation in the years to come. Without this inflation-adjustment fix, the effective rate on capital gains will be rising significantly, and that would place a big burden on the stock market and the economy. Let's keep our fingers crossed that someone back in Washington can figure this out before it's too late.