Dr. Bernanke is wrong.

[Centrehalf]

Summary and conclusion

Contrary to various experts, we suggest that in the current economic climate an increase in government outlays is not going to make Fed’s loose monetary policies more effective as far as boosting economic activity is concerned.
On the contrary, it will weaken the process of wealth generation and will retard economic growth.
What is needed to get the economy going is to close all loopholes for money creation and drastically curtail government outlays.

This will leave a greater amount of wealth in the hands of wealth generators and will boost their ability to grow the economy.

I read your link. It was interesting but I generally don't agree with the Austrians. I think they correctly assessed why we're in a liquidity trap but their ideas on how to get out of it are in my opinion based on a false premise which is "if only banks would lend surplus cash to wealth generators in order to modernize, everything would be hunky-dory." I know I simplified the article a great deal but that's what I took out of it. Let's say that happened, would that boost the economy? I don't think so because most people don't have the money to buy much right now, especially big-ticket items, and they don't have confidence that if they did spend money that they will receive more money later.

How much room is there really for the economy to grow? We're under 8% unemployment right now which may sound high to some people but bust cycles in the past yielded much higher unemployment rates, 5% is considered statistically negligible so job creation can only do so much for us.

From the article it's obvious the von Mises Institute doesn't think much of the Keynesians, which wasn't a surprise to me, but given the situation we're in right now I think the notion that Demand creates its own Supply is something we should be discussing. I don't think that would always work but given our current circumstances I think it would. Our government stimulated the wrong people and busting up $2.8 trillion in surplus cash and giving it directly to everyday working Americans, with the promise there will be more later, would do far more for us than hoping that making things which people are uncomfortable spending money on right now will do.

Of course, if the government continues overspending when things do turn around we're all screwed anyway.

 

[dogtowner]

Id agree that who got stimulated was bad but I see no better result in anyone else being stroked.

the fact that govt hid the truth about the real state of things was the real failing. it left us in a no win scenario and for no more reason than fraud.

still amazing to me that nobody eent to prison.

 

[Cruella]

still amazing to me that nobody went to prison.

Me too. Barney Frank comes to mind.

 

[Centrehalf]

Id agree that who got stimulated was bad but I see no better result in anyone else being stroked.

the fact that govt hid the truth about the real state of things was the real failing. it left us in a no win scenario and for no more reason than fraud.

still amazing to me that nobody eent to prison.

I agree, there are some people who should have gone to prison. I don't blame the government for hiding anything, the info was there for people to see but most people either didn't bother looking and/or wouldn't have understood what they were looking at. The writing was on the wall much longer than people would like to admit. The fact that we were in trouble was obvious as far back as '96-'97.

 

[dogtowner]

I agree, there are some people who should have gone to prison. I don't blame the government for hiding anything, the info was there for people to see but most people either didn't bother looking and/or wouldn't have understood what they were looking at. The writing was on the wall much longer than people would like to admit. The fact that we were in trouble was obvious as far back as '96-'97.

yes thats true but when it was brought.up Dodd&Frank shouted it down. Frank flstly declared.only weeks before it hit the fan that there were no problems. thats criminal.

 

[Centrehalf]

No one should have needed Dodd or Frank to tell them the obvious. Frank is definitely a piece of crap but I'm not sure that's criminal.