From ROBERTREICH.COM:
The latest jobs bill coming out of Washington isn’t really a bill at all. It’s the Fed’s attempt to keep long-term interest rates low by pumping even more money into the economy (“quantitative easing” in Fed-speak).
The idea is to buy up lots of Treasury bills and other long-term debt to reduce long-term interest rates. It’s assumed that low long-term rates will push more businesses to expand capacity and hire workers; push the dollar downward and make American exports more competitive and therefore generate more jobs; and allow more Americans to refinance their homes at low rates, thereby giving them more cash to spend and thereby stimulate more jobs.
Problem is, it won’t work. Businesses won’t expand capacity and jobs because there aren’t enough consumers to buy additional goods and services.
The dollar’s drop won’t spur more exports. It will fuel more competitive devaluations by other nations determined not to lose export shares to the US and thereby drive up their own unemployment.
And middle-class and working-class Americans won’t be able to refinance their homes at low rates because banks are now under strict lending standards. They won’t lend to families whose overall incomes have dropped, whose debts have risen, or who owe more on their homes than the homes are worth — that is, most families.
So where will the easy money go? Into another stock-market bubble…
Click here to read the full article.
Stimulus money is wasted unless the government is fierce about not letting our country slip into third world status.. Something like running a marathon of five miles. You sign up for five miles but after running three miles you decide to call it quits….you never finish and you never win.
The economy needs all the government can give and then more. We can pay back the deficit when we are working again and making money. Not just getting by.
By the way, the part about third world status…..a gentleman, a Portugese immigrant, said these words at a family gathering over 25 years ago. His exact words were “I hope I die before seeing America become a third world country.” Interesting.