Loans are surging!
I've said this many times, but it should be no surprise at all. China is not hampered by faulty belief systems such as, "Taxpayer on the hook," or erroneous notions about debt and deficits. Government stimulus is providing a significant boost to aggregate demand and the banks are responding by lending aggressively. This would be the way to fix the U.S. economy (which slowly appears to be on the mend), however, we have it all backwards.
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we need to :
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2. create a loan system that is very low interest for small businesses only
using deficit spending which does not come from taxes to achieve this while even cutting back on small business employment taxes would make things work very well.
The problem with #2 is that most people (including policymakers and the president) BELIEVE that spending is tied to tax revenues, therefore there IS a real constraint on deficit spending (it's political and psychological, but nonetheless, real), which means from a belief system point of view, deficit spending is related to tax collection and, therefore, has limits.
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