JohnMck wrote:Government does absolutely nothing well. They can't bail out the economy, either. This downturn should be able to run it's course naturally. We had a recession in the eighties that was defeated by tax cuts and patience. Keeping money in the private sector is the answer.The government meddling will only prolong the problem.
How does borrowing and spending money help our economy help us in the long run? It doesn't. It just drives up the national debt, and drives down the value of the dollar.
This plan to "Spend our way out of a recession", is doomed to failure, with us picking up the tab.
This was Herbert Hoover's thesis from the time of the crash in October 1929 until he got his tail thrown out in 1932. Had FDR not come in with all these "socialist" programs that you guys say you hate, we would not only have not been in a position to recover and win WWII, but there's a pretty decent chance that the entire experiment of "capitalism" would have simply failed. Don't forget, at that time there were government-driven economies in Germany, Japan and the USSR that were able to kick some serious ass in terms of manufacturing capability. And it wasn't your all-fired "pure" capitalism that beat them; it was FDR's New Deal.
The economy is not unlike our coal stoves/furnaces. I hate to travel in the winter, because I'm too cheap to run the electric baseboards to keep the place warm and, once the place cools off, it takes half a day to warm it up again. For several years, our economy, which after all is what generates tax revenue, was running at or near its peak, like our furnaces cranking full bore on a cold day. For some combination of reasons (real-estate downturn, sub-prime failures, maybe also the big jump in gas prices last year), people fairly suddenly had less to spend and the economy cooled off. Fewer dollars were available to buy the goods, which keep the merchants going, which keep the people who build stuff going, and then even less is spent, even more stores close, even more jobs are lost, and off we go into the downward spiral of recession. And, if nothing's done to slow it down or stop it, a depression will surely follow. When less fuel (in the form of money) goes in, the fire goes out and the furnace gets cold. And it'll take a helluva long time for it to self-start again.
So what can the gov't do? If you're a Herbert Hoover disciple, nothing. If you subscribe to the FDR/Obama approach, one thing the gov't can do is commission public works (bridges, roads, electric grids, alternate energy production) to put people (many who have lost jobs in housing-related industries) back to work. Sort of like stoking the furnace. When those people go back to work, the money they earn will be spent on appliances, cars and the other stuff that's stopped selling recently, and all of the people in those businesses in turn will have a market again. And when all of those people are employed again, they'll be paying taxes on the money they earn again, tax revenue will increase again, and so on until the "furnace" of the economy is working on its own again. And ultimately there will be enough tax money generated to repay the sources which provided the "fuel" to "stoke the furnace" to keep the fire from going out completely.
Otherwise, our experiment in the "free market" simply fails.