Devil505 wrote:Government spending is EXACTLY what we do need right now.Spending on war materials brought us out of the Great Depression & spending on jobs & infrastructure is what will bring us out of this one. Tax cuts for the wealthy & corporations was tried & helped lead us into this mess.
We got here because of deficit spending and too much credit for consumers and businesses alike. Unless the economy truly
shifts to one of depressionary deflation, then the proper course of action is to let economics take its course. We are not currently in a depression. We are in a recession and we haven't had one for quite some time so no one seems to know what to do. The past course taken by the government and the fed has only postponed the current recession by stoking the spending. Its effect has been to increase the severity of the current recession. But now we have run up a serious debt tab with each other and the rest of the world. The prescription for overspending is to stop spending. Simply put, This country has spent more than it has earned since the mid 1960's.
You cannot continue that indefinitely without endangering our existance through slavery to debt or war.
The government should concentrate on saving the banking system by ensuring liquidity therein, insure bank deposits, assist homeowners in keeping their homes if their case is reasonable, and run the existing programs and keep taxes the same. Essentially there should be no changes to the day to day operations of government unless we fall into a deflationary situation. This is not to assume one will transpire as Geithner is suggesting today. He is playing politics into the fear to pass the pork bill.
The US government is facing a very serious problem in that our "full faith and credit" is running out of faith by the Chinese. To finance the currently proposed spending, the US will have to borrow or print money (or both). Geithner is running around saying that the Chinese are manipulating their currency. Maybe, maybe not. The US set the stage for that in at Bretton Woods and in 1971 when we went off the gold standard for international settlements. Since then all currencies float free on their relative desirability. We continue to influence that through the IMF and the World Bank. Our dollar is becoming less desirable in the eyes of the Chinese and rightly so. They don't want any more of our debts. They want wealth. We don't have any except our overinflated RE values and our companies. There is a serious deflation risk with both. The Chinese will soon start buying up RE and US stocks if they haven't already.
That is why Geithner wants them to drop the value of the yuan, so that they cannot buy up our wealth and so that our debts to them are paid more easily. If we are unsuccessful at doing that, they will accumulate our wealth (fairly) in the settlement of debt. We are between a rock and a hard place. Even if we are the best customer the Chinese have, we aren't the only one. They can sell to themselves, India and the ROTW.
Spending now in reckless ways puts one more nail in the coffin of the US economy. Increasing our consumer spending when we don't have the productive capability to sell American, let alone buy American as the bill stipulates, will undoubtedly increase our debts to the Chinese and others.
Stop the INSANITY and tell your idiot congressman or senator to stop spending increases of all kinds. They need to work with what they have.