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monetary stimulus, how much is enough

Let's go back to 2008/9. Remember tarp and the the stimulus under obama? Some economist, like krugman, said it was the right direction, but that the amount of liquidity injected needed to be much more the bring us out of the depression. On the surface it would appear they were correct. The stimulus gave a small short term boost then fissled. Economist like krugman have pointed to the correctness of their statements. Let's fast forward to what we know now. The fed pumped a hidden $7.7t into the banks. $7.7 TRILLION, didn't work krug, how much, how much is enough krug? Name a number.
20 Replies
kraft-t
Senior Advisor

Re: monetary stimulus, how much is enough

The stimulus needs to go toward job creation not to bolster the financial markets. Part of the problem is that people see wall street as a measure of economic health. Not so! Main street business performance is a much better guage of our economic health.

 

That is why customers with money is much more valuable than businesses with tax breaks. Ironically business and their stockholders want both but their campaign to force lower  labor costs is self defeating. Even Henry Ford could see that a century ago.

 

Stimulus money directed to roads and bridges is stimulating economic activity on projects worth doing. Keeping police firemen and school teachers on the job is paying for needed services and putting money in their pockets. Tax relief does nothing to create jobs but the payroll tax cut does put money in the pockets for a stressed out middle class.

Re: monetary stimulus, how much is enough

I believe, according to keynsian economics, it does not matter were the money goes so long as it is unleased into the economy.

Re: monetary stimulus, how much is enough

I'm not accusing you of saying this but before somebody inevitably takes up this theme I would point out that the $7.7 trillion of emergency liquidity facility was during the Bush/Paulson days.

 

Emergency liquidity is a completely different matter than fiscal stimulus.

 

Not that it isn't a notable matter for discussion.

kraft-t
Senior Advisor

Re: monetary stimulus, how much is enough

The difference is whether the fusion of capital creates the desired result. I would rather pay the guy to mow my lawn than give him $20 for nothing. BTW they were saying on the news this morning that due to teacher layoffs some shools have as high as 30 to 40 kids in a classroom.

Re: monetary stimulus, how much is enough

John Maynard Keynes left town in the winter of 1981. Hasn't been seen since, other than in vehicles of discussion and argument between economists and news types, and the compariatively paltry stimulus of 2009. Which the shovel weilders aiming for that wall were able to get ito stick with the rubes and sheep that it was all, TARP and everything else, part of an Obama stimulus effort (SEE: nox's post). Nice piece of (media aided) propoganda work actually . Right up there with the evil, specificly shaded home loan grifters.

 

TARP and the 7.7 T weren't Keynesian manuvers. They were crony capitalism gone wild. TARP arguably justifiable only in that the circuit breaker had tripped. Those responsible for policy were convinced that the lights were going to go out. No idea about the other. Nobody seems to have any idea about that, other than of the magnitude of it's shock quaility. For what it's worth, it is being said that a substantial portion of it was paid back almost immediatly.....after a little basis extraction, of course.

 

 

Re: monetary stimulus, how much is enough

they were saying on the news this morning that due to teacher layoffs some shools have as high as 30 to 40 kids in a classroom.

 

That applies to my kids school.   I doubt it is affecting their education.

Re: monetary stimulus, how much is enough

For a nobel economist I don't think there is a difference. Had the monetary stimulus not been there collapsing debt, as I understand their theory, would have sucked money out of the system, to prevent this money has to be injected in. It does not matter where that money comes from or goes to, be it fiscal or straight liquidity injections. Building defenses for alien invasions as Krugman has said or dropping money from helicopters as Benny has said. (he should hover that over my house instead of Jamie Dimond's.)

Re: monetary stimulus, how much is enough

Is there anyhting you won't  take out of context? And, whether you wil admit it or not, there is a huge difference between those two scenarios.

 

The thing is also that one has actually been tried, over Dimond's house, as you say. In so long as any attempt at the other is catagorically described by most major politicans of both parties along with the business and political media as foolhardy, it stays on the shelf. Whether it's for roads or schools or upgrading the power grid or rehabing railroads OR for building defenses against alien invaders, it won't happen. The extractors and the keepers have won the day. They''ve declared, essentially, as Red alludes to in his post, that nothing is worth saving.

Re: monetary stimulus, how much is enough

Actually Bruce, if you're refering to Krugman and aliens, I put it exactly and precisely into context.