After the Crash

Economic growth in the United States is almost, if not quite, irrepressible. Democratic administration or Republican, it hardly seems to matter to the long postwar trend. Indeed, based on the evidence of 232 years of federal tinkering, American enterprise is policyproof.

Not that the incoming administration can draw much solace from that historical observation. This year's president-elect will be the heir to a burst financial bubble, just as George W. Bush was in 2000. Bush high-mindedly refused to blame the previous administration for the dot-com mania, but the new incumbent would be better served by candor. The truth is that the current mess is a symptom of persistent financial derangement, in particular a sickness of the dollar. At all-too-frequent intervals over the past 20 or so years, supposedly sound institutions and ostensibly rational markets have gone off the deep end. To meet the crisis, the Federal Reserve has intervened with lower interest rates and a faster pace of printing money. But the emergency monetary stimulus has predictably ignited a new speculative upswing -- and so it is over the cliff again.

What might an ambitious president do, besides no harm? He could plan for a return to a sound dollar, rein in Wall Street without incapacitating it, and resist the call to manipulate prices in a politically expedient direction. Do these things, and the very nearly irrepressible U.S. economy will right itself.

SKINNING THE CAT