Economists do not run the economy.

When George Bush became president in 2001 he was left a budget surplus by Bill Clinton. So he decided to play Father Christmas and gave away unnecessary tax cuts by passing the Economic Growth and Tax Relief Reconciliation Act of 2001. Then came 9/11 so, being from Texas, he decided to shoot from the hip first and think later. First the US attacked Afghanistan and then, stupidly, Iraq. Instead of increasing taxes to pay for the wars he passed another Jobs and Growth Tax Relief Reconciliation Act in 2003 building up a deficit of $14 trillion, equal to the GDP. During this time the then Fed Chairman, Alan Greenspan left interest rates low which resulted in the property price bubble, also called the Subprime crisis. Now the Federal Reserve has published a survey that it carries out every 3 years which shows that the median US family had no more wealth in 2010 than it had in the 1990s, a loss of 2 decades of prosperity. A median family is one that has half of families above and the other half below it. Net worth had decreased from $126,400 in 2007 to $77,300 in 2010. This was compounded by by 7.7% fall in income. The middle 60% of families suffered the most while the top 20% and the bottom 20% suffered less. This is because middle class families put more money in buying houses and home equity had dropped from $110,000 in 2007 to $75,000 in 2010. Fewer families were able to save anything, down from 56.45 to 52%, and those that could were saving for emergencies rather than for retirement, education or for down payment to buy a house. More than $1 trillion is outstanding in student loans of which $902 billion is federal and $140 billion private loans. Now 94% borrow to earn a bachelor degree as opposed to 45% in 1993. Average debt for students was $23,300 in 2011 with 10% owing more than $54,000 and 3% owing more than $100,000. Nearly 10% of those who started repayment in 2009 defaulted in 2 years and payments were continuing in only 38% of loans. This should be sobering reading for those who keep shouting for increased tuition fees for colleges in India. There is an outcry among bankers, business leaders and politicians in India for an interest rate cut to stimulate the economy. This will cause a fall in the value of the rupee and a rise in inflation. Brainless growth will help only the rich while the middle class and the poor will suffer a fall in standard of living due to inflation. Also there is an enormous property bubble hanging over the economy. Lowering interest rates may prop up the property market in the short term but will only make it bigger in the long term. Perhaps the only hope is for a crash in the Eurozone. This will cause foreign investors to withdraw money from India leading to a fall in the share market and property prices making them accessible to middle class people while the fall in commodity prices will decrease inflation and allow the RBI to cut interest rates to stimulate the economy and create jobs. However, with the World Famous Economist in charge and elections in 2014 who knows what our fellows will do.