Wednesday, March 05, 2008

Keep On Trucking

I try to inform my Readers on the dangers and limitations of monetary and fiscal policies, and find that Stephan Roach does it better. The real inspirational aspects of his argument comes in the form of the truisms which he articulates: Monetary policies create Credit bubbles when they attempt to generate economic growth, and retard economic growth when they seek to constrain Inflation; fiscal policies should generate future growth, not Consumer over-consumption; and bubble recessions impact specific sectors–depressing relative Supply measures to the greater economy–rather differently than cyclical recessions which are festooned by a general lack of Consumer Demand with a backlog of Production supply.

I would not get too technical here, simply state that bubble recessions lack the deflationary pressures of cyclical recessions, in neither Case does liquidity play an overlarge role in corrective recovery, and all fiscal initiatives which do not promote future economic growth will lead to an overdraft of resources–maintaining artificially high Prices to the detriment of the economy. Bubble recessions can actually be highly inflationary, where Productions Costs can be bloated due to lack of resource provision (Credit provision Costs–if resident at all–making up only an incredibly small portion of the Production Costs). Cyclical recessions, on the other hand, react rather poorly to monetary policy, falsely sustaining undue high Prices, stopping the clearing of the over-supply existent in the economy. Monetary policy activity will only create false premises which will eventually turn into Consumer over-reaction, and eventual economic loss of potential; fiscal policy works only by infrastructure construction to promote economic growth.

I must, in the tradition of the overfed and overconfident Pundit, come up with my very own proscription for economic success, given the proclaimed woeful (check the Q4 2007 GDP growth still at 1.9%) state of the economy. It must be something brilliant and edifying, which no one else has thought up (I hope--the issue of plagurism a real plague). I hereby come out with a Call for Interstates segregated and devoted to Truck traffic alone. I would suggest that the new highways be called Truckstates, none connecting directly to any City, and that there should be 3 East-West Routes, and 4 North-South Routes. The new Truckstates would save Our current Interstate system from intense erosion because of constant Truck traffic, moderate the heavy traffic on the current Interstate system, and provide immense stimulus to economy recovery with real future economic growth potential. Truck traffic will be directed to the Truckstates by a mandated advantage in fuel cost from Truckstate stations. Slower Truck Speeds do not aid fuel conservation because of the heavy tonnage involved, so Truckstate maximum speed should be 80 mph. It is an idea whose Time might not have come, but has to come sometime. lgl

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