Instead, I believe there must be a better way. That better way, in my view, is an expansionary fiscal policy that is sustainable. Fiscally sustainable policies are long-term pro-growth strategies that don't themselves blow up the debt. On the cost cutting side, it includes entitlement reform to make deficits sustainable; such a policy is pro-growth because investors are more likely going to allocate money when they see fiscal policy is sustainable. On the revenue side, rather than plow huge amounts into fiscal expansion by the government, the cutting of red tape can go a long way towards unleashing growth. Over the past 15 years, I believe red tape has increased rather dramatically in many sectors, inhibiting growth.
Axel Merk is president and chief investment officer of Merk Investments.