MONEY CULTURE

What's the Best Fix?

Why politicians and economists can't decide.

By Daniel Gross |
Jan 13, 2009 | Updated: 5:34  p.m. ET Jan 13, 2009

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  • Posted By: TheReason @ 05/09/2009 3:25:47 PM

    The politicians are not the ones in power people. It is the banks or i should say the Federal Reserve

    This story really kills me. And you have a PRIVATELY owned bank like the Federal Reserve who cannot track or explain where 9 trillion dollars went?

    Why hasn't ANYBODY audited the PRIVATELY owned Federal Reserve? They are owned privately just like Wells Fargo. Why was the Federal Reserve not in the stress test?

    Where is the missing 9 TRILLION dollars?

    http://therealnews.com/t/index.php?option=com_seyret&Itemid=91&task=videodirectlink&id=1389

    Here is video of one senate meeting you wont find in the media because this information would cause hysteria.

    I used to laugh at these black helicoptor people. I am not laughing anymore.

  • Posted By: dirtdigger @ 01/28/2009 1:09:55 PM

    I'd advise 'thinking outside the box'. Our foreign 'balance of trade deficits' have a lot to do with our current economic 'crisis'.

    Our economy suffers from far too much 'leakage' since we're pouring a huge portion of our economy into foreign markets without ever seeing that money again. It is not just our burgeoning 'energy deficit'; it is our continuing 'march to outsource' that has put us all into this 'bind'.

    We currently have enormous trade imbalances with China, India, Japan, Russia, Brazil, Indonesia,...

    When we buy now, the money we spend gets sent immediately to a foreign country and never gets 'recycled'. Then, we've got to borrow it back or sell out our industries to foreign investors - who have our cash.

    In 1776, we declared war for our independence, but even years later, we were still financially held prisoner to the supplies of necessary commodities that were sold to us by England.

    The only way our economy will ever recover is when we've restored a semblance of balance to our foreign trade.

    The recovery we need has to be driven by a change of philosophy of all U.S. corporations - "Made in U.S.A." needs to be restored to its former place - on our own clothing, automobiles, computers,.computer software, call centers ...
    i
    Otherwise, we're pouring our 'stimulus' and 'bailout' funds 'down the drain'.

    Otherwise, we're in a retreat that will put us into the very same economic dependence we had in 1776.

    • Posted By: deju-vu @ 03/08/2009 1:12:10 PM

      FIFTY percent of ALL of China's exports are from "American" owned companies.
      Think about how many American jobs were lost to create FIFTY percent of ALL of China's exports.

  • Posted By: david222 @ 03/01/2009 2:27:24 PM

    Everyone seems to be in agreement that lowering taxes is the answer. I saw eliminate all income taxes on everyone including corporations, and replace it with a national consumption tax. HR25 is a bill in committee in the House of Representatives and would do just that. This bill has 21 co-sponsors and would repeal the 16th amendment , eliminate all income taxes and institute a consumption tax. Go to www.fairtax.org and get all the info before you say it won't work. If you like filing a tax return every year and think the IRS is doing "ONE HECK OF A JOB", then maybe the fair tax is not for you. BUT if like most of us you are searching for a real solution, not a pipe dream, than look no further. WWW.FAIRTAX.ORG is for you . Read about it and make up your own minds. If you like what you see, then you can contact all your elected leaders including President Obama, from the site and let your voice be heard.

  • Posted By: slam @ 02/26/2009 2:32:08 PM

    I think the government should buy the foreclosure houses at foreclosure price. latyer on, turn around and sell them to returning soldiers and local teachers at cost and low mortgage rate. After it is done, transfer the loan to Freddy Mac and Fanny Mae. By doing that, it reward the service of out soldiers and teachers. It also will takes the foreclosure properties off the unsold housing market and the banks. Think about the pros and cons of my suggestion.

  • Posted By: 500night @ 01/30/2009 10:38:04 PM

    identify and explain what economic concept "My Stimulus Is Better Than Yours!" of Daniel Gross?

  • Posted By: 500night @ 01/30/2009 10:37:02 PM

    identify and explain what economic concept My Stimulus Is Better Than Yours! of Daniel Gross

  • Posted By: ThisGuy @ 01/29/2009 8:07:56 PM

    Listen pal, write your articles in crayola and tape 'em up on your mom's refrigerator because that is about the only spot your opinion should be read.

    " Having exhausted its traditional tools of regulating interest rates, the Fed could print money and use it to buy assets from banks and financial institutions."

    Lets call this the "Zimbabwe Fix" or the "Weimar Dance of Doom"

    "The second solution???a big stimulus package fueled by government spending???hasn't been tried in 75 years. The main concern about the package as currently envisioned it not that this type of stimulus won't work, it's that, as Paul Krugman frets, it might not be big enough."

    OK this is the real rich portion of your article, not that your solution of printing money wasn't hilarious. I was looking for the hidden joke there, tongue in cheek and all that but sadly I believe you really meant printing money was a feasible option. I digress. So the government spends money it doesn't have by issuing debt. The Treasury prints up a fancy certificate on really nice paper and makes it very official and proper and calls it a Treasury Note, T-Bill, whatever. The government then sells this lovely piece of paper and promises to pay at a later date based on....nothing except a wink and a smile and hey, they are the U.S. government, not some crackerjack tinpot banana republic. This debt is an asset that can be sold by virtue of voodoo mumbo jumbo financial regulations. Who buy's? Why lots of people but the number one player on the street is the Federal Reserve (a private corporation in all but name). The Federal reserve buy's this dubious asset from the government and in return hands over fistfuls of freshly printed money. So in essence there is only one solution, printing money, and the fed has been running that pump for the past 30 or so years. That is where the whole "hasn't been tried in 75 years" part comes in. You see the government's pre-1929 debt was a rather meager thing due to the fact Uncle Sam was a much better bookkeeper and ran a very low level of debt. FDR spending was wow-wee crazy because it had never been done before in the U.S. Since then of course we have been deficit spending like crazy, never more so than the last 8 years. Deficit spending is no longer and wow wee crazy but the normal order of business even more deficit spending doesn't matter that much when one is already in hawk up to the gills.

    Please next time do your homework and if Mom's nice she'll give you a cookie after din din.

  • Posted By: deju-vu @ 01/26/2009 8:48:05 AM

    The "History" channel has a very informative program you might find interesting.
    "Crash / The next big depression"

  • Posted By: dlm1ok @ 01/14/2009 2:35:44 PM

    In order for the stimulus to work the money needs to be sent to the taxpayers to spend in their communities, banking and etc. The increase in spending will increase demand, increase in demand will increase production, incrrease in production will increase jobs, decrease unemployment. However, putting the money into things that might work or to big business that only lines the pocket of their CEO's is nothing more than fraud and theft of the government and taxpayers. The poor have an increase in aid, the unemployment has been extended, but those that make less than $100,000 lose at least a third of their income to taxes, medicare and pensions. They get nothing so their spending remains cautious. If the government were to be in the mortgage business with payments deducted from paychecks, their would be less forclosures. Argue that government shouldn't be into the banking, well, what do you think they are doing now?

    • Posted By: cmkc @ 01/14/2009 2:45:13 PM

      I absolutely agree with you. Our government is operating in collusion with the private banking system. Greenspan said he never believed the banks would operate in way to hurt the customers -- how naive. The fleas have been killing the dog not just sucking out its life. Get rid of the Fed and put someone in Treasury that is not part of big banking system.

      • Posted By: deju-vu @ 01/23/2009 10:15:14 AM

        It was Greenspan that first stepped in for Keating,
        From a May 21, 1990 NEWSWEEK article: "Bonfire of the S&L's"

        "The senators say that they interceded on behalf of Keating because they were persuaded by a letter written by A. Greenspan, now chairman of the Federal Reserve and then a private consultant, vouching for Lincoln's health. And Greenspan was paid to write the letter by a law firm that was representing... Charles Keating."

  • Posted By: phillyphil1 @ 01/14/2009 11:34:38 AM

    hey, deju-vu, knock it off! you're making it hard to find the comments that are more closely related to this article, by posting huge volumes of somewhat-related material. why not just post links to the information, with a brief comment stating that you have information about appraisal problems which can be accessed through the link?.

    • Posted By: deju-vu @ 01/14/2009 1:13:38 PM

      you must have something to hide, for I had no problem going through every post on here, you must be either a realtor, loan broker or left over appraiser that gave-in and do not want the truth told.

      I gave you FACTS on how your government not only knew this was risky but contributed to it and basically caused this entire economic problem.

      Every one is whining and crying about this mess, I just gave you the one solution that would of prevented the entire mess from ever happening.

      • Posted By: phillyphil1 @ 01/14/2009 4:53:05 PM

        Nice... baseless wild accusations against me ("must have something to hide") and insults to everyone else ("whining and crying")... Way to add to your credibility! (No, I'm not involved in the real estate industry at all; I work in IT for a non-profit.)

        All I was trying to say was that the volume of information you posted would be better posted elsewhere, with a link to it here, for the sake of readability and conciseness. Forums quickly become useless when people hi-jack them into unrelated, or somewhat-related, topics.

        The question posed by the article was "What's the best way to FIX..." and I was very interested in the solutions people would propose. Our current mess is a lot bigger than appraisal problems and was caused by more factors than just appraisals. Your concern about appraisals is probably valid; I didn't disagree with you. I just happened to be more interested in people's opinions about the best way to fix our current situation, and therefore found your postings to be off-topic and overstated.

        Okay, now I'm probably guilty of what I objected to in the first place... distracting from the subject at hand. Oops...

        • Posted By: deju-vu @ 01/23/2009 9:55:51 AM

          Phi, with out the over valued mortgages NONE of the other variables to this economic implosion would/ could be possible, NONE of it, so how did these mortgages get over valued, phil, faulty and fraudulent appraisals, that regulators said were a "serious national problem costing taxpayers billions" 20 years ago.

          So if faulty and fraudulent appraisals cost the American taxpayers BILLIONS 20 years ago, how the hell could they be the base for the entire American economic security being put in jeopardy?

          You can try and minimize it all you want but I have given you proof positive that your government, after being made FULL aware of the main problem to the last $500B bailout of the banking industry, instead of fixing this problem, they knowingly made it worse leading to this economic crisis.

          Phil my credibility is established by my sincere honesty in my posts and maybe you have missed ALL the news and blogs where everyone in the country and most of the world is whining and crying about this crisis, maybe there is a better way of wording it but if everyone would of paid the least amount of attention to what was going on (wages stagnant/prices out of control) instead of partaking in using their homes as piggy banks, "flipping" homes and taking out 100-120% loans we wouldn't be in this mess.

          I hope everyone found it worth it. Because this "hang-over" after the last 20 year drunken economic party will last a while.
          Sorry if I interrupted your quest for an answer.

      • Posted By: phillyphil1 @ 01/14/2009 4:31:25 PM

        Nice... baseless wild accusations against me ("must have something to hide") and insults to everyone else ("whining and crying")... Way to add to your credibility! (No, I'm not involved in the real estate industry at all; I work in IT for a non-profit.)

        All I was trying to say was that the volume of information you posted would be better posted elsewhere, with a link to it here, for the sake of readability and conciseness. Forums quickly become useless when people hi-jack them into unrelated, or somewhat-related, topics.

        The question posed by the article was "What's the best way to FIX..." and I was very interested in the solutions people would propose. Our current mess is a lot bigger than appraisal problems and was caused by more factors than just appraisals. Your concern about appraisals is probably valid; I didn't disagree with you. I just happened to be more interested in people's opinions about the best way to fix our current situation, and therefore found your postings to be off-topic and overstated.

        Okay, now I'm probably guilty of what I objected to in the first place... distracting from the subject at hand. Oops...

      • Posted By: phillyphil1 @ 01/14/2009 4:30:09 PM

        Nice... baseless wild accusations against me ("must have something to hide") and insults to everyone else ("whining and crying")... Way to add to your credibility! (No, I'm not involved in the real estate industry at all; I work in IT for a non-profit.)

        All I was trying to say was that the volume of information you posted would be better posted elsewhere, with a link to it here, for the sake of readability and conciseness. Forums quickly become useless when people hi-jack them into unrelated, or somewhat-related, topics.

        The question posed by the article was "What's the best way to FIX..." and I was very interested in the solutions people would propose. Our current mess is a lot bigger than appraisal problems and was caused by more factors than just appraisals. Your concern about appraisals is probably valid; I didn't disagree with you. I just happened to be more interested in people's opinions about the best way to fix our current situation, and therefore found your postings to be off-topic and overstated.

        Okay, now I'm probably guilty of what I objected to in the first place... distracting from the subject at hand. Oops...

      • Posted By: phillyphil1 @ 01/14/2009 4:29:03 PM

        Nice... baseless wild accusations against me ("must have something to hide") and insults to everyone else ("whining and crying")... Way to add to your credibility! (No, I'm not involved in the real estate industry at all; I work in IT for a non-profit.)

        All I was trying to say was that the volume of information you posted would be better posted elsewhere, with a link to it here, for the sake of readability and conciseness. Forums quickly become useless when people hi-jack them into unrelated, or somewhat-related, topics.

        The question posed by the article was "What's the best way to FIX..." and I was very interested in the solutions people would propose. Our current mess is a lot bigger than appraisal problems and was caused by more factors than just appraisals. Your concern about appraisals is probably valid; I didn't disagree with you. I just happened to be more interested in people's opinions about the best way to fix our current situation, and therefore found your postings to be off-topic and overstated.

        Okay, now I'm probably guilty of what I objected to in the first place... distracting from the subject at hand. Oops...

      • Posted By: phillyphil1 @ 01/14/2009 4:25:35 PM

        Nice... baseless wild accusations against me ("must have something to hide") and insults to everyone else ("whining and crying")... Way to add to your credibility! (No, I'm not involved in the real estate industry at all; I work in IT for a non-profit.)

        All I was trying to say was that the volume of information you posted would be better posted elsewhere, with a link to it here, for the sake of readability and conciseness. Forums quickly become useless when people hi-jack them into unrelated, or somewhat-related, topics.

        The question posed by the article was "What's the best way to FIX..." and I was very interested in the solutions people would propose. Our current mess is a lot bigger than appraisal problems and was caused by more factors than just appraisals. Your concern about appraisals is probably valid; I didn't disagree with you. I just happened to be more interested in people's opinions about the best way to fix our current situation, and therefore found your postings to be off-topic and overstated.

        Okay, now I'm probably guilty of what I objected to in the first place... distracting from the subject at hand. Oops...

      • Posted By: phillyphil1 @ 01/14/2009 4:21:01 PM

        Nice... baseless wild accusations against me ("must have something to hide") and insults to everyone else ("whining and crying")... Way to add to your credibility! (No, I'm not involved in the real estate industry at all.

        All I was trying to say was that the volume of information you posted would be more appropriately posted elsewhere, with a link posted here, for the sake of readability and conciseness. Forums quickly become useless when people hi-jack them into unrelated, or somewhat-related, topics. The question posed by the article was "What's the best way to FIX..." and I was interested in what answers people would propose. Our current mess is a LOT bigger than just appraisal problems (and was caused by more factors than just appraisals). Your concern about appraisals may very well be valid; I didn't disagree with you. I just happened to be much more interested in people's opinions about the best way to fix our current situation, and therefore found your tangent rather distracting and overstated. If you make your point in a more appropriate forum it can be better debated there.

        Okay, now I'm probably guilty of what I objected to in the first place... distracting from the subject at hand. Oops...

      • Posted By: phillyphil1 @ 01/14/2009 4:18:10 PM

        Nice... baseless wild accusations against me ("must have something to hide") and insults to everyone else ("whining and crying")... Way to add to your credibility! (No, I'm not involved in the real estate industry at all; I work in IT for a non-profit.)

        All I was trying to say was that the volume of information you posted would be more appropriately posted elsewhere, with a link posted here, for the sake of readability and conciseness. Forums quickly become useless when people hi-jack them into unrelated, or somewhat-related, topics. The point of the article was about how to fix the mess we're in, which is a LOT bigger than just appraisal problems (and was caused by more factors than just appraisals). Your concern about appraisals may very well be valid; I didn't disagree with you. I just happened to be much more interested in people's opinions about the best way to fix our current situation, and therefore found your tangent rather distracting and overstated. If you make your point in a more appropriate forum it can be better debated there.

        Okay, now I'm probably guilty of what I objected to in the first place... distracting from the subject at hand. Oops...

      • Posted By: phillyphil1 @ 01/14/2009 4:16:23 PM

        Nice... baseless wild accusations against me ("must have something to hide") and insults to everyone else ("whining and crying")... Way to add to your credibility! (No, I'm not involved in the real estate industry at all; I work in IT for a non-profit.)

        All I was trying to say was that the volume of information you posted would be more appropriately posted elsewhere, with a link posted here, for the sake of readability and conciseness. Forums quickly become useless when people hi-jack them into unrelated, or somewhat-related, topics. The point of the article was about how to fix the mess we're in, which is a LOT bigger than just appraisal problems (and was caused by more factors than just appraisals). Your concern about appraisals may very well be valid; I didn't disagree with you. I just happened to be much more interested in people's opinions about the best way to fix our current situation, and therefore found your tangent rather distracting and overstated. If you make your point in a more appropriate forum it can be better debated there.

        Okay, now I'm probably guilty of what I objected to in the first place... distracting from the subject at hand. Oops...

  • Posted By: expatincebu @ 01/14/2009 6:30:29 PM

    1. Eliminate the unconstitutional Federal Reserve.
    2. Close all foreign military bases, bring all troops home, cut the military budget by 80-90%.
    3. Re institute the heavily progressive income tax. Close all offshore and fake accounting loopholes.
    4. Re regulate corporations and enforce anti trust and break most of them up.
    5. Re-pass Glass-Steagal.
    6.Return to a gold and silver based currency.
    7.Real election reform that totally removes private money and lobbying money from the process.
    8.National single payer health care to lower cost, remove burden from small business, and allow workers freedom to quit their jobs without fear go getting sick with no coverage.

    Everything else is just spitting in the wind. Credit induced bubbles must pop. Pumping in more credit may inflate new bubbles elsewhere but they will pop as well. The final bubble is a federal spending bubble we are starting now. Based on credit, it to will fail. The end result will be far worse than the original recession would have been. All this cumulative credit, fake economic activity, must be cleansed out. You do not cure an alcoholic by giving him a shot of tequila.

    • Posted By: deju-vu @ 01/18/2009 6:51:34 AM

      It was reported the other nite that if America cut it's military spending by 10%, we would still be spending more than Russia, England, Australia, China, India, Japan, combined

  • Posted By: deju-vu @ 01/16/2009 7:14:43 AM

    "What's the Best Fix?"
    Please correct me if I'm misinformed.
    Have they or have they not been reporting for months now about how unsecured OVER- VALUED "mortgage backed securities" are the root to this entire economic implosion?

    Unsecured OVER-valued mortgage backed securities.

    How did these mortgage backed securities get over valued?

    If the ROOT of the problem centers around OVER-valued real estate mortgages, wouldn't the "Best Fix" center on making sure mortgages aren't over-valued?

    Oh geez wait, wasn't it OVER-valued mortgages that was the blame for the last "largest taxpayer bailout in history", 20 years ago, that cost the taxpayers over $500B?

    Yet here we are, 20 years later, and the blame for the worse economic implosion the world will ever see and will take a generation or two to pay for is the very same culprit that caused the last great taxpayer bailout.

    Yes or no without these over-valued mortgage backed securities could this implosion ever be possible? Obviously not since they were necessary to "back" the would-wide economic explosion.

    So if the number one, root problem has been blamed on unsecured, over-valued mortgage backed securities, wouldn't the simplest "Best Fix" be to make sure mortgages aren't over-valued?

    After over-valued mortgages cost the American taxpayers over $500B 20 years ago, shouldn't someone with an ounce of dignity and American patriotism stepped forward and made sure over-valued mortgages never cost the taxpayers another such enormous bailout?

  • Posted By: deju-vu @ 01/15/2009 8:32:53 AM

    "Whats the Best Fix?"
    An honest government that protects it's constituents from repeated massive fraudulent bailouts.

    How did the housing market get so out of proportion with earnings?
    http://efinancedirectory.com/articles/This_is_Why_I_Rent%3A_Median_Incomes_Do_Not_Support_Median_Home_Prices.html
    After the massive bailout of the banks 20 years ago (due to over-valued mortgages) how can we possibly be facing such a global failure due to over-valued "mortgage backed securities"?

  • Posted By: xlcongi @ 01/15/2009 7:49:12 AM

    i want more on this,can you do that for me babe?thank you

  • Posted By: xlcongi @ 01/15/2009 7:48:31 AM

    good comment,can u tell me more on this? thank you babe

  • Posted By: cmkc @ 01/14/2009 2:22:51 PM

    Bob_hall27, please spell it out for me.

    Marty, I did not say have the fed lower the interest rate --- I said do away with the Fed, do away with a private bank creating our money supply and profiting off of it. The Treasury should be the people's bank.

    • Posted By: bob_hall27 @ 01/14/2009 9:05:25 PM

      1. Keynesian economics does not work it is a pipe dream 2. Social programs are not in the power of the United States this is a power reserved to the individual states. 3. I have not found a liberal that has actually read the constitution the only thing they do is repeat what someone told them or how someone has magically decoded something in it. This document was written in a way that the simplest of us could understand it --there is no need to interpret it. We are not a democracy If anyone can find one mention of democracy in the constitution I would love to see their copy, the Constitution guarantees us a republican form of government article, 4 section 4 A democracy is mob rule where there is always someones rights stepped on it is not freedom it is fascism. I have not met one liberal who understands liberties either. This is just a start sorry I don't have more time to enlighten you more.

      • Posted By: cmkc @ 01/15/2009 12:30:14 AM

        Thank you. I agree, there are a lot of people that don't read up on anything. They think it will be boring or just too complicated. I have found it enlightening but also scary when I realize how in control or the world the Federal Reserve, the IMF, and the World Bank are. Its always been boom and bust; boom for the banks and bust for the workers. Andrew Jackson kicked out the private banks but they got back in; Abe Lincoln went around them and issued greenbacks but the banks got back in. The banks control the economy and all other aspects of our lives.

  • Posted By: BearTheCat @ 01/14/2009 11:23:36 PM

    The goal of the American economy is to convert goods into trash as quickly as possible.

    The problem is that the consumer still has debt when to pay past the point when the goods have become trash.

    If peopled learned to live within their means then debt wouldn't be any problem.

  • Posted By: klebrun @ 01/14/2009 9:28:01 PM

    Posted By: klebrun @ 01/14/2009 8:30:49 AM
    The godfather and enforcer for the conservative ideology was Dick Cheney and his two famous quotes - (1) debt doesn't matter and (2) nobody saw it coming.

    It seems that debt does matter after all.

    And if you are wearing ideological blinders and absolutey refuse to deal with reality, then you can rationalize the second quote about not seeing it coming.

    But since this fiasco is a repeat of past deregulation mania, any competent manager should have seen it coming. Having worked for Wall Street firms and as a mortgage broker, we had relative stability in the markets for the last 70 years until that idiot took control of goverment, intimidated the non-ideologues and ran us over the cliff with his ideology.


    Report Abuse Reply Posted By: Greg the Third @ 01/14/2009 9:57:09 AMExcellent post, keep it coming!


    Posted By: klebrun @ 01/14/2009 8:18:38 AM
    We created an artificial economy with massive borrowing and spending both at the personal and government levels. The Bush administration doubled the total national debt accumulated since 1776, to the tune of $5 trillion plus and the private sector is bullging at the seams with debt..

    And now we are in a catch 22. If we don't continue the massive borrowing and spending, we end up in an extended recession. If we do continue the massive borrowing and spending, at some point the system collapses fromt he weight of the debt.

    The best we can hope for with the stimulus packages is a soft landing as the economy adjusts to the new reality. And that will be a long, slow and painful process. Anybody thinking we are going back to the bubble days soon should share some of what they are smoking with the rest of us. It has to be really good stuff.


  • Posted By: WorthFlorida @ 01/13/2009 11:12:15 PM

    What ever happened to laissez-faire? Isn't it one of the backbones of a free society? Government have a hard enough time running the government and the last thing government needs to do is try to run businesses. Giving money away (loads they are called) will not fix the economy nor less taxes or too low of an interest rate. If money is too cheap (low interest) and it loses its value and everyone suffers due to lower interest paid everywhere and no one makes money on the money. If you increase the interest rate slowly and carefully, it does become more valuable, more interest is paid and therefore more will buy goverenment bonds, etc. Then we all start making a little more interest. Over time the US currence will fix itself and the world again will clammer for the almighty dollar.

    • Posted By: bob_hall27 @ 01/13/2009 11:21:20 PM

      I'm sorry but you have absolutely no clue how our financial system works. Why don't you go do some homework and get back with us. You could start out by Googleing "the Creature From Jekyl Island"

      • Posted By: Libricrat @ 01/14/2009 9:22:09 AM

        Actually, he's right, mathematically at least. According to my last econ class, lowering interest rates, lowering taxes and increasing spending are all short term GDP boosters. After, a little while the economy returns to equilibrium. The only long term economy booster is raise in interest rate. I offer the situation in China right now as my evidence.

        • Posted By: bob_hall27 @ 01/14/2009 9:15:32 PM

          If we had a solid money system instead of a fiat system ran by an out for profit central bank this would be a moot point.

  • Posted By: foosi @ 01/14/2009 8:20:55 PM

    manipulation of the economy does not work. government needs to get out of it entirely and let it function according to its own natural laws. then there won't be the moral hazard effects of people expecting bailouts and magic rescues. instant anti-inflation prudential effects.

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