Boston University’s Kotlikoff: We’re Suffering from ‘Hysterical Economy’

Thursday, 13 Dec 2012 07:54 AM

By Dan Weil

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink
The widespread panic over the fiscal cliff has given us a “hysterical economy,” says Boston University economist Laurence Kotlikoff.

“You’re an employer. Every day you hear ‘the economy’s going over a fiscal cliff. Tax hikes and spending cuts will kill the economy,’” he writes on Forbes.com.

That fear makes companies start firing their workers. Other firms see less demand as a result, and they start doing the same thing, Kotlikoff says.

Editor's Note: Unthinkable Haunts Investors: Evidence for Imminent 90% Stock Market Drop.

This collective freak-out then creates the hysterical economy.

The government would do well to address our budget problems, Kotlikoff says.

A key issue is the $222 trillion fiscal gap between projected future government spending and tax revenue.

“[I]f we want to panic, there is something real to panic about,” he writes. “It’s the fiscal abyss, not the fiscal cliff.”

It would be better if Washington stopped scaring the public about the cliff and instead provided real leadership on the budget issue, Kotlikoff says.

Average Americans too are critical of the government’s approach to the cliff.

"Somebody's gotta have some smarts," 63-year-old New Hampshire business owner John Pfeifle told The Associated Press. He’s displeased that both President Barack Obama and House Republicans appear to be willing to jump off the cliff.

"I have no faith at all they'll do the right thing," he said of Congress.

Editor's Note: Unthinkable Haunts Investors: Evidence for Imminent 90% Stock Market Drop.

© 2014 Moneynews. All rights reserved.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Retype Email:
Country
Zip Code:
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
You May Also Like

Hussman: Stock Bubble Goes 'Easily Beyond 1929 and 2007'

Monday, 28 Jul 2014 12:17 PM

You might say that John Hussman, president of Hussman Investment Trust, is a bit bearish on stocks. . . .

Axel Merk: 'Fed May Be Fooling All of Us' With Its Exit Signs

Tuesday, 29 Jul 2014 10:07 AM

While we are busy arguing whether the Fed's exit will consist of rising rates, reverse repos or the trimming of its mass . . .

Fed's Fisher: Central Bank Risks 'Staying Too Loose, Too Long'

Monday, 28 Jul 2014 16:39 PM

Dallas Federal Reserve Bank President Richard Fisher, one of the Fed's inflation hawks, is concerned that the Fed's mass . . .

Most Commented

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved