Quote:
Originally Posted by Villages Kahuna
Several politicians and others are currently being quoted that spending the better part of a trillion dollars in an attempt to stimulate a disastrously damaged economy is not the correct thing to do.
Unfortunately, the critics never seem to offer an alternative. Do they propose that the amount should be smaller? Larger? Should the government stay out of the business of trying to stimulate the economy and permit the free market to make the corrections? Usually after the criticism of the plans being put forth by the new administration, no other alternative plans are proposed. Criticisms are limited to a dislike for what's being proposed, but with no "better idea" offered.
So a question for this forum might be...
Should the huge economic stimulus package being designed by President-elect Obama and his financial advisors be enacted into law? Should the amount be increased? Decreased? Or should the government simply do nothing, let the free market make whatever corrections it can, and tend to other issues of national governance?
I would suggest that as participants respond to these questions that they incorporate some sort of economic argument on why the alternative ideas they suggest might work better. It would add to an interesting discussion of respondents opined on how their alternative suggestions would improve the economy, whether there's a chance their ideas might actually worsen the situation, and what effect alternative suggestions would have on the duration of the current economic cycle. If references to other alternatives or other expert opinion can be cited in replies, they might add to everyone's understanding of the economic theory underlying the alternatives being considered or suggested by both the new administration as well as their critics.
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OK, Steve and DKL, am I interpreting your replies to mean that no action should be taken by the Congress or the administration to address the current financial crisis? While I would disagree with that recommendation, I would like to learn more about why you think a "limited government-free market" approach would reverse the current economic decline and begin to strengthen the U.S. economy in some reasonable time frame.
Remember, there's little more the Fed can do with monetary policy to help the situation. Interest rates are already close to zero and they're printing money as fast as they can without cratering the value of existing treasury bonds held by foreign investors. Whatever government response is chosen, it will certainly have to be in the area of fiscal policy rather than monetary policy.