The economy needs a stimulus to get going. Austerity, the obsession with immediate debt reduction, will only make things worse. Stimulus, however, requires an exit strategy: a medium-term plan that would take effect in, say, 2016 to pay down debt.Fiscal stimulus can take two forms: tax cuts or more Government spending. Both will increase the Government’s debt. Tax cuts could take the form of a payroll tax cut targeted at working class people or new hires. The benefit of a payroll tax cut is that it incentivises employers to create jobs and employees to spend. Fiscal stimulus is based on the premise that your spending becomes someone else’s income, which in turn becomes someone else’s income and so on: a virtuous cycle.Employers will likely want a minimum three-year payroll tax cut to make hiring worth their while. The annual cost of a meaningful tax cut is around $150 million, which over three years will cost the taxpayer almost half a billion dollars, taking our debt position to over $2 billion.I worry about capital projects because of poor internal costs controls: of every tax dollar spent only 60 to 70 cents can be accounted for in the form of a tangible asset. Capital projects also carry a depreciation factor that tax cuts avoid. The combination of tax cuts and capital spending of $70 million to $100 million annually over three years will likely push the debt-to-GDP ratio close to 50 percent; it’s now 25 percent.Monetary stimulus is another policy lever that could be used. Political pressure otherwise known as moral suasion can nudge banks to begin lending again. Part of the reason for the prolonged recession or depression, as it will probably be known, is that lending is flat after growing at an annual average of 11 percent between 1998 and 2008.A Bermuda Monetary Authority (BMA) report says it better, “in economic terms alone, the causes of the present situation stem primarily from an excessive and uncontrolled expansion of credit … and a sudden reversal”. Of course the BMA report was talking about the last four-year recession.Entrepreneurs, not Government, will create jobs and put the economy on a sustainable path. Government needs to encourage or, at the very least, get out of the way and allow this optimistically delusional race of women and men to do their thing: take individual risks from which society stands to gain much and lose little. Arguably, the likelihood of an entrepreneurial spring is higher now than prior to the recession.A crisis spells opportunity: for every economic, environmental, social, personal, and technological problem, there is a delusional entrepreneur experimenting with a solution. Some solutions will cast aside established businesses: economists call this process creative destruction. Progress and creative destruction are one in the same.Government’s role in the hospitality, international business, energy, and retail sectors is to give them the ability to fail. Businesses cannot succeed with a soccer-mom mentality from Government.And finally, foreign investment is crucial to a recovery and sustained growth. The 60-40 rule will, therefore, need loosening for publicly traded and private companies.Craig Simmons is an economist and economics lecturer at Bermuda College.