"What we're starting to notice is that it's much more difficult to think outside the box than in it. When we were in the box, we had these authorities we trusted - the Times, Harvard, National Public Radio. If someone asked us about X, our answer was: what does Harvard say about X?...."
What we call a "recession" is a gap between what consumers, with their 2009 brokerage statements, want to consume, and what producers, who did not expect the asset price collapse, planned to produce. These numbers must be equal. The obvious way for them to converge is for the productive economy to reduce capacity - close factories, lay off employees, etc. As Andrew Mellon put it: "Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate.".... I think liquidation is an error.
Step zero: call up Larry and Sergei, and get them to lend USG a few hundred of Google's best coders. We'll need them to write our new financial system....Step one: nationalize all market-priced financial assets at the present market price, exchanging them for new dollars....
Step two: triple each of these dollars....
Step three: calculate the expected shortfall in future entitlements (Medicare and Social Security), and print new dollars to fill the gap....
Step four: auction all the financial assets previously nationalized - corporations, real estate, etc....
Step five: renumber the currency. Every dollar in the world (perhaps about 200T) has a new serial number - from 0 to 200T) ....
