Jump to content
House Price Crash Forum
Sign in to follow this  
interestrateripoff

Don’t Let The Stimulus Lose Its Spark

Recommended Posts

http://www.nytimes.com/2009/08/23/business...ml?ref=business

ENCOURAGING economic news has been reanimating the critics of President Obama’s stimulus program. But heeding their admonition to end the program would be a grave mistake. We need more stimulus now, not less.

Even if the economy is improving, it is still very weak. Another quarter-million jobs were lost last month, and even the most optimistic economists predict that it will be many more months, if not years, before robust employment growth resumes. Now we face an ominous new threat to recovery from sharp cuts in state and local government spending.

The more than $15 billion excised from California’s budget last month was just a small fraction of recently announced cuts. Although some people object to the federal stimulus program on grounds that government spending is inherently inefficient, most recent state cuts have been for services widely viewed as essential. These cuts were mandated by laws meant to stop politicians from spending beyond their means. While such measures may be beneficial on balance, sharply reduced government spending is exactly what the economy doesn’t need right now.

Through its legal authority to run deficits to stabilize the economy, the federal government can keep recovery on track by transferring revenue to states and cities. Of course, opponents of the original economic stimulus program have no desire to see it extended this way. Yet they haven’t made a persuasive case. The flaws in their arguments don’t rise to the absurd heights seen in recent town hall meetings on health care reform. But it is a difference in degree, not kind.

Both proponents and opponents of the stimulus program agree that unemployment is high because aggregate spending levels are too low to create jobs for everyone. Where they disagree is about the remedy. Proponents believe that sharply higher government spending will hasten the downturn’s end. Opponents say no.

Stimulus proponents begin with the observation that before late 2007, total spending was enough to support full employment. But then consumption, which had been inflated by home equity loans based on illusory housing prices, fell sharply, and it is likely to remain below 2007 levels indefinitely.

That decline caused a parallel fall in investment, because most businesses already had the capacity to produce more than people wanted to buy. Here, too, spending is likely to remain depressed for many months. And with the economies of many other countries also in the doldrums, demand for American exports is unlikely to pick up the slack.

Lets prop up the economy even further with more money that doesn't exist.

The economy is a junkie fixated on growth, it's unsustainable and if this continues will implode.

You can only spend what you get in.

The economy has been artificially stimulated for too long and now the contraction appears to coming despite of the efforts of govt to hide reality.

Share this post


Link to post
Share on other sites

So the calls to keep printing money continue .... no real surprises there.

The first stages of inflation look like a recovery - so little chance of the money press being turned off.

What will be interesting to see is how all this freshly printed cash gets distributed ... ie. How much ends up in the pockets of the general public through wage rises.

It seems to me that it's more and more likely that we will get stagflation with the general population getting (relatively) poorer and poorer but with a class of oligarchs (bankers, heads of multinationals, high ranking politicians etc) with direct access to the money tap getting proportionately richer and richer

Share this post


Link to post
Share on other sites
So the calls to keep printing money continue .... no real surprises there.

The first stages of inflation look like a recovery - so little chance of the money press being turned off.

What will be interesting to see is how all this freshly printed cash gets distributed ... ie. How much ends up in the pockets of the general public through wage rises.

It seems to me that it's more and more likely that we will get stagflation with the general population getting (relatively) poorer and poorer but with a class of oligarchs (bankers, heads of multinationals, high ranking politicians etc) with direct access to the money tap getting proportionately richer and richer

I bet not much of it ends up in the proles pockets it will be all for the bankers.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   295 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.