YES: Obama's stimulus plan is right on track
Bobby Guererro, Staff Writer
Issue date: 2/9/09 Section: Perspectives
President Barack Obama was sworn in as the 44th President of the United States on Tuesday, January 20. With his much-anticipated inauguration finally come and gone, we can start looking at the long road ahead. The largest looming problem on this road is by far the state of the American economy.
In recent months, the American people have been faced with hitherto unforeseen problems in the American economy. The tumultuous and unregulated previous years have potential to bring gloom and doom, not to mention the absolutely dreaded "economic depression." These fears stem from several sources. The housing bubble being burst like a cheap water balloon was the first of these foretelling events. When the "housing crisis" hit, banks (and investment banks) began loosing money so rapidly they could barely scrape by with enough to avoid bankruptcy or failure. Some weren't even that lucky (recall the bailout of Fannie Mae, Freddie Mac, Citi Group, etc). In turn, banks simply stopped lending funds. In turn, businesses and consumers find that they cannot borrow money for necessities. In turn, both manufacturing and retail have went down the tubes. And in turn, we are now facing a 7.2% unemployment rate and, despite being a much-contested metaphor, conditions not seen since the 1930's.
Today, economists are scrambling to analyze and assess the problem and prescribe a solution. Prior to this recession, many thought that our economy was in fact depression-proof. Since it is now apparent that without any kind of action from the government, America could swing much too close to depression. And now that this is clear, economists are taking sides.
Milton Friedman, a Nobel Prize winning economist who died in 2006, was one in support of monetary policy (the supply, availability, and interest rate of cash) as a depression preventative. He also stressed that tax-cuts were sufficient action on the government's part to pull the country out of depression-like conditions. The head of the Federal Reserve, Ben Bernanke, has been pumping money into our economy at a more-than-generous level. Alongside this maneuver, the Federal Reserve has cut the Federal Funds rate to probably the nearest it can get to zero. Yet the economy remains sour and it is clear that the time for using monetary policy adjustments has passed.
In recent months, the American people have been faced with hitherto unforeseen problems in the American economy. The tumultuous and unregulated previous years have potential to bring gloom and doom, not to mention the absolutely dreaded "economic depression." These fears stem from several sources. The housing bubble being burst like a cheap water balloon was the first of these foretelling events. When the "housing crisis" hit, banks (and investment banks) began loosing money so rapidly they could barely scrape by with enough to avoid bankruptcy or failure. Some weren't even that lucky (recall the bailout of Fannie Mae, Freddie Mac, Citi Group, etc). In turn, banks simply stopped lending funds. In turn, businesses and consumers find that they cannot borrow money for necessities. In turn, both manufacturing and retail have went down the tubes. And in turn, we are now facing a 7.2% unemployment rate and, despite being a much-contested metaphor, conditions not seen since the 1930's.
Today, economists are scrambling to analyze and assess the problem and prescribe a solution. Prior to this recession, many thought that our economy was in fact depression-proof. Since it is now apparent that without any kind of action from the government, America could swing much too close to depression. And now that this is clear, economists are taking sides.
Milton Friedman, a Nobel Prize winning economist who died in 2006, was one in support of monetary policy (the supply, availability, and interest rate of cash) as a depression preventative. He also stressed that tax-cuts were sufficient action on the government's part to pull the country out of depression-like conditions. The head of the Federal Reserve, Ben Bernanke, has been pumping money into our economy at a more-than-generous level. Alongside this maneuver, the Federal Reserve has cut the Federal Funds rate to probably the nearest it can get to zero. Yet the economy remains sour and it is clear that the time for using monetary policy adjustments has passed.
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movers
posted 5/20/09 @ 11:15 AM MST
A couple months later, it's difficult to tell if the stimulus plan ended up being as good as we had initially thought. Times are still very tough and many people are questioning the effect deficit spending will have on our economy and on future generations. (Continued…)
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