Misdiagnosing the Stagnation | Richard W. Rahn | Cato Institute: Commentary

Misdiagnosing the Stagnation | Richard W. Rahn | Cato Institute: Commentary: "he is ignoring the fact that much, if not most, of government spending does not meet the test of the highest and best use for the money. It does not even meet a much lower standard of spending benefits exceeding their costs."

"There is an enormous body of empirical evidence from around the globe showing that a country or a state cannot tax itself to prosperity, but many continue to be deaf to these lessons."

"mortgage rates have been driven down to the point where a 15-year mortgage can be acquired for an interest rate almost identical to the rate of inflation. In other words, the money is, in effect, free to the borrower, who also gets to deduct the interest cost from his taxes.

On the other side of the equation, those who are responsible and save are receiving virtually nothing on their savings accounts, money market funds, etc. The 10-year government bond is now providing a return of only 1.6 percent, well under the rate of inflation. Artificially low interest rates for savers engineered by the Fed have the same destructive effect as a high tax rate on savings. Homebuyers are being subsidized at the expense of those whose savings ought to be more productively invested in new technologies and new jobs."