Sunday, March 29, 2009

Lack of regulation or not enough procreation?

Why is the world economy in such a mess? In the view of the Obama administration, there was not enough regulation of banks and the markets. With their new regulations, things will get better.
But what if that's not it. What if it boils down to Mark Steyn's sentence - Four grandparents have two children have one grandchild.
For an asset to have value, you need someone to sell it to. For the past 25 years, a large number of people have been bidding up the value of assets - stocks and houses - in hopes of having a good retirement. Now the baby boomers are starting to retire and needing to sell those assets. If there's fewer buyers and too many sellers, the value of the item goes down.
Instead of regulation, the Obama administration should encourage procreation. In 20 years, they can buy our houses and stocks. And work to pay down our debt.

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