When Ronald Reagan became President, the U.S. was at the tail end of the traumatic post-Vietnam period. U.S. pride was seriously wounded by the decisive military defeat and its financial position significantly compromised by massive government spending and the resultant inflation, particularly following the end of the gold standard. Thus, the U.S. government decided that it needed to “try something new” if it wanted to put the U.S. back at the top of the global map. So “Version 1.0″ of financial engineering began with Reagan’s simply-termed “supply-side economics”, which were nothing more than lowering taxes (despite fiscal deficits) and reducing regulation so that businesses could fully display their entrepreneurial spirit. Does lowering interest rates and regulation sound familiar?
