The Julia La Roche Show
#130 Dr. Charles Calomiris On Fiscal Dominance And The Return of Zero-Interest Bank Reserve Requirements
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Quick takeaways
- Fiscal dominance and the return of zero-interest bank reserve requirements pose a significant threat to the US economy in the next decade.
- Addressing the long-term fiscal challenges and unsustainable promises of entitlement spending requires political leadership and accountability.
Deep dives
The Long-Term Outlook for the U.S. Economy
Dr. Charles Calomiris discusses the long-term outlook for the U.S. economy. In the short run, the economy is stable but faces risks of recession. However, the more concerning perspective is the long-term economic policy that has neglected fiscal discipline for the past few decades. The article emphasizes that both Democrats and Republicans have been reluctant to address the issue of overspending, leading to a dysfunctional economy and a lack of willingness to confront reality. This has resulted in unsustainable promises, particularly regarding Medicare and Social Security, which cannot be fulfilled without forcing the Federal Reserve to abandon its inflation target and run a banana republic-style economy. The article calls for increased accountability and responsibility from voters towards politicians who perpetuate denial politics and ignore the long-term arithmetic problem.
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