What's the Best Fix?

Mr. Gross writes: "Wouldn't you prefer have Tall Paul and the Maestro making crucial economic decisions to letting the clowns in Congress run things? Most economists certainly would. "

Hey, Mr. Gross. I'm an economist. I don't.

Has it ever occured to you that "The Maestro" bears significant blame for this mess? His deeply irresponsible "easy money" policy (which came to be know on the Street as "The Greenspan Put") contributed significantly to three bubbles (internet stocks, commodities and real estate). And counting.

And yet you call him the Maestro and wish him to be in charge again?

Mr. Gross, you've just sadly, but graphically, illustrated the adage that the electorate gets the government that it deserves.

Ten years with the government's help the banks have been talking more than their share from the consumer's back pocket. when their nest egg was gone the consumer used their credit cards. When the credit cards maxed out. The banks gave them loans on their home equity. Now that the economy is bad and the consume is in fear of loosing their jobs, and the banks already have taken all the consumer's reserves. Do you really think people are going to start spending with $600 bucks, after they lost their savings their job and their house. Get real is isn't going to get fixed until people start feeling like they are going to have a fair shake at living before the banks and government get their share.

They got us into this mess but believe me, they have NO CLUE how to get us out. No clue, none, zilch, zip, nada.

Why does Newsweek insist on calling Daniel Gross's pieces "Newsweek Web Exclusives" when they are all posted to Slate as well???

"Greenspan banished the business cycle?" He banished it alright. He directly contributed to the meltdown we're experiencing today. Somehow, I don't think that was the original concept...

The stimulus package will not succeed because it is merely putting the money in the pockets of big businesses, who really don't care about the small people, their loyal workers. They instead give hefty bonuses to their CEO. Put the money in the pockets of the citizens that will spend it, thereby increasing retail spending, purchasing cars, homes, furniture, food, utilities and other items. This will increase the demand, which will increase jobs, and increase of jobs usually means increase in spending. It becomes a cycle but right now money only goes to low income in aids, and the rich. Those in the middle get nothing. Some argue it's not needed but you take someone who makes $80,000 will have probably close to $35,000 taken out of thei r checks in taxes, medicare and etc. They need help too. Give to the citizens who will spend in the markets and their communities, not the big businesses that will line the pockets of their CEO's. I've always believe the mortgage crisis could've been averted if the mortgages went through the government with paychecks being attached for payments. This may have reduced the percentage of defaults. Some argue the government is not supposed to be into banking, but what do you think they are doing right now?

Hitler raged against the private banks. He blamed the banks for the plight of Germany and situations existing in the 1930's, ie, high inflation and umemployment. He brought Germany from total devastion to a major power in the world by doing a number of things -- some obviously very evil -- but one of those things was strictly regulating the banks and at the same time issueing "Feder" money, ie, fiat-money created by the government, Not Private Banks. This happened in 1933-1937; in four years Germany became the strongest economy in Europe, before armament spending began.

Mr. Gross, I'm not German or European (I'm an American citizen), and yet even I find your parenthetical remark about German Finance Minister Peer Steinbruck patently offensive. To say, "Perhaps he prefers the crass way his predecessors dealt with the crisis of the 1930s?" is completely unwarranted. The man's nationality or beliefs about "crass Keynesianism" is absolutely no justification for making suggestions that he's somehow a Nazi sympathizer or otherwise supportive of Adolf Hitler's ambitions.

Many Americans (yourself included) need to wake up. Our ills aren't just the result of the Bush administration's actions over the past 8 years. America's problems with arrogance and a "we know best" attitude (even when we don't) are widespread, and it will continue to cloud our place in the world long after the departing administration is gone. A failure to accept that we don't know everything (coupled with a lack of recognition that many European countries are actually FAR AHEAD of the United States in areas like renewable energy, recycling, health care, and so on) will do nothing but hold us back and reinforce America's negative image.

I lived in Germany as a member of the U.S. armed forces in the early 1990s, and even then it was a very progressive, forward-looking country. The United States is in a deep hole, with problems largely of it's own making, and we need to be open-minded and receptive to new ideas from all around the globe. World War II was more than 60 years ago. The Germans have moved on. Why haven't you?

Mr. Gross;

First it is very disappointing and damaging to your integrity to take such an unnecessary swipe at the German Minister.

Second, if you are going to highlight an economist's position, perhaps you should also do a few seconds research to ascertain the validity. See fivethirtyeight.com and (University of Chicago economics grad) Nate Silver's analysis of Mankiw's out of context usage of Romer's work.

Mr. Gross, I'm not German or European (I'm an American citizen), and yet even I find your parenthetical remark about German Finance Minister Peer Steinbruck patently offensive. To say, "Perhaps he prefers the crass way his predecessors dealt with the crisis of the 1930s?" is completely unwarranted. The man's nationality or beliefs about "crass Keynesianism" is absolutely no justification for making suggestions that he's somehow a Nazi sympathizer or otherwise supportive of Adolf Hitler's ambitions.

Many Americans (yourself included) need to wake up. Our ills aren't just the result of the Bush administration's actions over the past 8 years. America's problems with arrogance and a "we know best" attitude (even when we don't) are widespread, and it will continue to cloud our place in the world long after the departing administration is gone. A failure to accept that we don't know everything (coupled with a lack of recognition that many European countries are actually FAR AHEAD of the United States in areas like renewable energy, recycling, health care, and so on) will do nothing but hold us back and reinforce America's negative image.

I lived in Germany as a member of the U.S. armed forces in the early 1990s, and even then it was a very progressive, forward-looking country. The United States is in a deep hole, with problems largely of it's own making, and we need to be open-minded and receptive to new ideas from all around the globe. World War II was more than 60 years ago. The Germans have moved on. Why haven't you?

Stupid idea, to think that the Fed lowering their interest rate will fix the economy. It just lets the bank make more money. Let's see the government gives the banks money at 1 percent interest. The banks get to decide how much interest to charge for home mortgages and credit cards, with little or no regulation. The government passes bankruptcy laws to pin consumers under their dept to the banks. Add ten years of this oppressive environment created by the banks and the government, and you get recession. The banks and the government have killed the consumer cash cow.

The biggest thing that liberals lack that people that believe in a for real free country is common sense

Right - lets just keep trying the same old stuff that really does work for the banks and will continue to set up the taxpayer for fleecing and will destroy the middle class. Here's one thought you seemed to have missed: Lets change the system to correct the fundamental problem - the real problem - the problem no media source will investigate or address as a possible cause of our woes: THE FED! Oh my, you say, could it be the banking system? Why do we have a private bank making profit off the taxpayer - driving business into ruin? We, the people, should have control over our money supply. We, the people, should create money - Yes we can - and thereby do away with the cost of interest on the debt which would not be there since we created the money not the private bank. Please. please, read Web Of Debt by Ellen Brown.

Right - lets just keep trying the same old stuff that really does work for the banks and will continue to set up the taxpayer for fleecing and will destroy the middle class. Here's one thought you seemed to have missed: Lets change the system to correct the fundamental problem - the real problem - the problem no media source will investigate or address as a possible cause of our woes: THE FED! Oh my, you say, could it be the banking system? Why do we have a private bank making profit off the taxpayer - driving business into ruin? We, the people, should have control over our money supply. We, the people, should create money - Yes we can - and thereby do away with the cost of interest on the debt which would not be there since we created the money not the private bank. Please. please, read Web Of Debt by Ellen Brown.

Re: Credit Card interest Deduction. I'll speak for myself (appearently one of the very few without credit card dept)- I've also worked hard and sacrificed to NOT have such debt (ie. I did not buy into Main Street's offers). Now I stand like the rest in my plnat with layoffs looming. Handing out money or printing more of it will not solve what many individuals- not goups, parties, or demoniations- but each person believe and knows is a moral and heart problem in America. There's nothing wrong with living within your means and being content. I also agree there's an overblown comparison to the GD. It's a global market, and that's not going away.

I noticed that you didn't come right out and state that FDR's policies worked though

It really seems very simple. If you set asiide hardline libertaianism where government doesn't have a role in the market, the best times for keynesian approach is at the time a previously brisk economy begins to soften, and short term borrowings are made to get money off the sidelines, and pay off the borrowed money soon after. When the economy is so ravaged, Keyensianism doesn't work. Having the government be the borrower/spender of last resort KEEPS people on the sidelines as people are not willing to take risks the deeper the government gets into the "bailout business".

But unfortunately what we have had the last two decades works against Keynesianism too in that the government borrowed and spent DURING THE GOOD TIMES to make the good times even better so that the room to do borrowing by the government isn't there without making things worse.

So we don't need even more borrowing to get us out of this. It will only make things worse as no one will take risks and the economy will contract even further. Keynesianism is at best a gentle nudge of an approach itself, and it just isn't going to get it done. I think harsher methods would be required , the kind you can get away with in during a wartime economy. Absent war such methods will be bared as a Command Economy. If anyone is planning to spring a Command Economy any time soon, I'll see you on the battlefields in the Square States of America.