Tags: maxton | us | taxes | economy

Graeme Maxton: US Headed Back Into Recession, Must Raise Taxes to Survive

By    |   Monday, 17 Oct 2011 02:19 PM

The United States will fall back into recession, without a doubt, but the nation can’t have progress and growth without reducing debt, so taxes will need to be raised, says author and economist Graeme Maxton.

"No question it's going back into a recession. It's not a different recession, it's the same recession," he said in an exclusive Newsmax.TV video interview.

Maxton says Federal Reserve Chairman Ben Bernanke and former Fed Chairman Alan Greenspan are the major architects of the problems the nation faces.

For 30 years, the government, businesses and individuals have run up so much debt that raising revenue to pay it off cannot be avoided.

"The way we measure progress today is in terms of economic growth. And economic growth depends on consumption growing, and 70 percent of the U.S. economy is consumption. And that cannot continue growing because of the debt," Maxton told Newsmax.TV.
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"So we can't have progress, and we can't have growth because of the amount of debt that's in the system. We have to find a way to get rid of that debt, and that means paying it back. And that's going to constrain our growth for perhaps even decades to come."

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Paying it back, unfortunately, means consumers will be paying higher taxes to rid the economy of debt that piled up from three decades of running up credit-card bills, auto loans and home loans, among many others.

Spending cuts alone won't push the economy further along the path to recovery.

"You can't pay back the debts by boosting consumption. The government, the individuals and the banks have got to reduce their levels of debt, and you can't do that without cutting spending and without raising taxes," says Maxton, author of  “The End of Progress: How Modern Economics Has Failed Us.”
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"I know it's not a popular message, I know it's not what people want to hear but it is, unfortunately, the only way forward. The other way is bankruptcy."

Despite what his critics say, President Barack Obama isn't anti-business, Maxton says.

Former Federal Reserve Chairman Alan Greenspan and current chairman Ben Bernanke, however, are bad for the U.S. economy.

Both monetary policy chiefs have expanded the money supply and access to credit, which have fueled credit bubbles and debt burdens that will take decades to pay down.

"Bernanke and Greenspan are major architects of the problems that the American people face and in fact that the world faces. Instead of controlling the bubbles as they grew out, instead of limiting the extent of lending in the banking sector, instead of stopping consumer borrowing before it got out of control, they encouraged it believing that the free market would step in and bring back balance," Maxton says.

"The fact that Ben Bernanke and Alan Greenspan before created this mess, yes they need to be held accountable."

Many economists today advocate Adam Smith, the 18th Century philosopher who claimed the invisible hand of the market made society better than the hand of the government.

True, Maxton says. But that tenet doesn't advocate an every-man-for-himself attitude that he says is becoming more prevalent these days.

"Adam Smith is seen as a great libertarian of course because he believed in the invisible hand and the free market," Maxton says.

But many are taking Smith's theories and are distorting them.

"For example, Adam Smith would have believed that we should tax the rich more than the poor because that's more likely to produce a just and fair society. He would have believed that we should be paying more for our oil today than we do because we should be paying for all the environmental costs that oil extraction incurs and also for the fact that our grandchildren will not have that oil," Maxton says.

"So our world economy would be quite different if we followed the principles of Adam Smith rather than just the simple ideas of the free market."

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The United States will fall back into recession, without a doubt, but the nation can t have progress and growth without reducing debt, so taxes will need to be raised, says author and economist Graeme Maxton. No question it's going back into a recession. It's not a...
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2011-19-17
Monday, 17 Oct 2011 02:19 PM
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