Nixon started the process of deregulation and over injecting of money into the markets, but was stymied by the Vietnam War and a strong opposition party. Nixon's administration helped to set in place a shell which Ronald Reagan and David Stockman filled up with money [what GHWB called "VooDoo Economics"] and what we see now is that the supply side economics started in 1981 has spectacularly failed.
Dick Cheney is wrong.
Deficits do matter, and the free ride of "trickle down economics" is the root cause of all of what we see today. Too much capital was injected into speculation, and the control rods have been yanked out. Income disparity, fraud and waste have been the hallmarks of economic markets since the mid 80s.
Can the control rods be thrown back to 'scram' the economy before it blows up and we have 200 bank failures? I think it can, but ..
.. it will require a massive redistribution of wealth from the top, totally unprecedented in history.
Bernie Sanders has an idea to institute a tax on the most wealthy.
His 10% surcharge tax plan is not aggressive enough, however.
Lowering the cap gains tax rate, like the Republicans want to do is exactly the WRONG thing to do.
Here's my 'ignorant' suggestions:
Stop the bleedout of mortgages, by keeping people in their houses. This requires some agency to oversee a process to renegotiate mortgage rates with owners in distress. The drop in property values is what has driven this crisis, and address this symptom now to prevent more massive losses.
Maintain liquidity for lending by providing loan guarantees. A fee of a dollar for every transaction on the markets would help to fund this, and a surtax on the most wealthy in the country would help to provide a cushion to maintain a usable balance.
The tax rates on the most wealthy in this country have been unsustainably low since the early 1980s. Look at the historical tax rates, and it becomes readily apparent what has happened. The world has followed suit and they have also reduced tax rates on the most wealthy. This has served to inject a huge amount of money into markets and away from building up infrastructure.
There is no 'market solution' to this problem, other than reversing the VooDoo. Some 25 years in, it's time to start backing out.
It's going to be painful, but we have to get back to progressively taxing wealth, building infrastructure and saving money the old fashioned way. It will take decades of reduced growth to do this, but there's no need for another 'great depression'.
It's time for adults to step in, and stop this wild speculation.
Watching Reid and Obama, I see adults.
The public appears to agree.