That is where I disagree, and that Kondratieff assumption led Pretcher to miss the 1987 to 2000 run in a big way. He saw October 1987 as the first salvo in a new Kondratieff down cycle, yet AG massive intervention to prevent continuation of the 1987 debacle, combined with responsible budgets in the 90's (though I disagreed with the excessive surpluses created later in the 90's and 2000) led to a new higher plateau in GDP, and better lives for most. Now, as I suggested very early in 2000, we are simply in a period of "adjustment", sub par growth, but hopefully, no major recessions where unemployment get close to 10% as it did few times in the 70' and 80'. I surely prefer that to what the good Prof. R suggests, a rapid contraction of up to 30% in GDP (as we had in the 30') setting the stage for a new growth phase.
Yes there is too much debt, IMTO, it is due to strange taxation (interest on debt is tax deductible to corporations, but dividends are not tax deductible, thus a capital structure heavy in debt is preferred, since the cost of capital is subsidized by the government). One reason I believe that the drive to exclude dividends from taxation now in full gear is lunatic, but I have discussed this subject too much already in previous posts. If at all, they should make dividends tax deductible to corporations, not recipients of said dividends. By the way, why not make interest payments to individuals on corporate bonds tax deductible? That should help the geriatric population that is being robbed right now with extremely low short term interest rates.
Zeev
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