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Dilbert on the Economy

Posted by billspaced | 10:39 AM | 0 comments »

Yes, it's a horrible economy. Just read a piece on Mankiw about the money multiplier. It's now less than 1. That means that, for example, every dollar the Fed "creates," 5 cents of it immediately disappears. Doesn't seem to be a wise investment. This is why a fiscal stimulus is the ONLY policy prescription that has a chance to work.

People are losing their jobs, and consequently, their incomes. Get a dollar, save a dollar. Or try. That's the thought, anyway.

Obama has to persuade Congress to pass a bill with a primary focus on job creation.

To do that, there are various means. The most promising would be direct investment by the federal government in projects like rebuilding the power grid, developing alternative energies, re-energizing our school system, rebuilding bridges, roads, tunnels, and other huge infrastructure.

DC could also offer incentives to private enterprise in the form of tax cuts, rebates, and grants. Of course, they have to ensure that the money gets spent for its intended purpose (unlike the money they gave away to the banks, who used it to shore up balance sheets, save it, and hoard it, instead of loaning it out, as was the implicit expectation).

Leave me a comment on how you're fairing in this dismal economy. Have you lost your job? How are you making ends meet, or are you? Lost your home?

Or, are you doing just fine, even maybe getting ahead? How are you doing it?

Readers of this blog want to know how to cope. The "news" is horrible. Is there a shining light out there that's being ignored? How do you cope?

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