George Soros' Answer -- Substitute Consumer Spending with Government Investment Spending

This excerpt is from "The Sovereign Debt Problem" by George Soros, written 10/5/2010. In summary, Soros argues that we are in fact in a deflationary environment in the U.S. and more fiscal stimulas is necessary, and a continued reduction in the consumer spending variable contributing to Gross Domestic Product. The continued stimulus which will counter increasing unemployment is in growth to infrastructure in a form of Government Investment Spending. This is a rational argument that I support. In fact, recently the U.S. Government borrowed money from the capital markets at the lowest rates in history. It is the opportune time for the U.S. government to invest this borrowed capital in bridges, increased energy efficiencies, high speed rail, electric energy infrastructure (see Bloomberg, ZipCar implementation in the city of New York), and other infrastructure investments which will increase employment in the U.S.

"The obvious solution is to draw a distinction in the budget between investments and current consumption and increase the former while reducing the latter. But that seems unattainable in the current political environment. A large majority of the population is convinced that the government is incapable of efficiently managing an investment program aimed at improving the physical and human infrastructure. Again, this belief is not without justification: a quarter of a century of agitation calling the government bad has resulted in bad government. But the argument that stimulus spending is inevitably wasted is patently false: the New Deal produced the Tennessee Valley Authority and the Triborough Bridge." George Soros, 10/5/2010

For more information, read Soros' complete essay.