O% Rates?
A huge burst of money creation + a $700 billion bailout for financial institutions + a probable auto bailout + another looming $600 billion - $1 trillion in deficit spending by the new Democratic administration and Congress + a $100 a barrel drop in the price of oil = a gigantic application of monetary and fiscal stimulus to the US economy = the next bubble in 2011.
In a crisis like today's, it's hard to remember that the actions of the government will have their consequences in 12-18 months' time. On every side, you hear warnings today that we are doing too little. Only after it is too late will the same voices discover that we did too much ....
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Yes, Frum is correct. The cure is worse then the disease. Recessions are part of the normal business cycle. Putting yourself trillions of dollars in debt, and trying to change what is natural is a mistake. This downturn was caused by too much cheap credit. The US wants to solve the problem by adding even more cheap credit to the system. It will not work, just like Japan tried to spend their way out of a recession.
ReplyDeleteI know. It's all happening and there's nothing we can do to stop it.
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