We’ll escape this mess with just a moderate recession, and the markets will soon return to normal.
That’s the belief of Laurence J. Kotlikoff, a professor at Boston University, and Perry Mehrling, a professor at Columbia University.
Investors seem to be expecting a financial collapse, another Great Depression, they point out in an opinion piece in The Washington Post.
No chance. Uncle Sam — that is, Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke — just won’t let that happen.
The government stood by idly in the early 1930s while the economy collapsed. Today is different, they write.
Paulson’s rescue plan and the Fed’s pumping money into the economy will ultimately work, the professors contend.
The government is essentially recycling our money, in the form of Treasury bonds, back into the system, they explain.
Banks are unwilling to lend, so the government has become our lender, and our insurer through AIG. Some may say that’s socialism or state capitalism, but it’s really just rearranging the financial furniture, argue Kotlikoff and Mehrling.
“As Americans have freaked out, Uncle Sam has stepped up. He'll continue doing so until we realize the sky is not falling,” they write.
Despite stock declines, we still have the same economic capacity overall. While some are losing, others are winning: Those buying assets cheap, like couples buying their first homes or investors buying stocks that have cratered.
There are dismal forecasts out there. Don Brady, who says he predicted the housing bubble and unraveling economy in his first book in 2005, predicts a mega-depression in his new book, "The Greatest Depression of All Time.”
The U.S. experiences major crisis every 60 to 70 years, he asserts.
“I'm just a regular guy, but I have a different type of mindset. I see U.S. history as repeating itself, although specific circumstances affect the type of crisis we have.”
© 2017 Newsmax. All rights reserved.