| Michael Pento Favors Depression vs. More Stimulus: Dan Greenhaus Can't Believe It |
August 16, 2010 - 1:50pm — europac admin
By:
Peter Gorenstein
Source:
Yahoo! Finance
August 12, 2010
The economic recovery “has slowed” the Federal Reserve said in its latest statement. Job creation remains anemic, foreclosures are on the rise and the threat of deflation is front and center.
What can the Fed and/or the U.S. Government do to improve the outlook? Will further stimulus help or hinder economic growth?
Michael Pento, senior economist at Euro Pacific Capital, and Dan Greenhaus, chief economic strategist with Miller Tabak, debate the issues in this clip.
Pento, a follower of the Austrian school of economics, believes more government intervention will only worsen the situation. Greenhaus, more of a centrist, believes government must fill the void in times of weakness, like these.
Rather than add our commentary we’ll let them do the speaking. Here are some excerpts from the impassioned discussion.
On Government stimulus:
Greenhaus: “It’s simply false to suggest the government cannot impact broader economic activity. That is not born through history. The two greatest expansions since 1900 have been largely on the back of government spending (and) infrastructure spending.”
Pento: “The government can have only a negative effect on the economy. Government is vacuous entity...We should cut taxes aggressively and cut spending aggressively. To make impotent the government and give the private sector and the free market as much power as possible so we can grow our way to of this fiscal mess as soon as possible while we strengthen our currency.”
On Government borrowing:
Greenhaus: “We have no problem in the bond market we have no problem with interest rate… the government can get away with it right now.”
Pento: “Do you want to wait until have a bond market or dollar crisis?” “What are you going to do if interest rates start to soar? What are you going to do if the dollar starts to plummet?”
Another Depression
Pento: The economy needs to go through a “severe, hopefully truncated, depression. Have it now, have it in the safest and quickest fashion so you can get onto a real and viable recovery.””
“What I really want is an abbreviated period of reconciliation where the consumer pays down their debt.”
“Healing is sometimes very painful in the short run.”
Greenhaus: “He’s voting for a depression! The idea that somehow a depression should be encouraged” is wrong.
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