Friday, January 9, 2009

Economic Stimulus

For twenty years now we've been adjusting the Fed Funds Rate as a panacea for all our economic woes. Hey, it worked for Reagan so why not, right?

Adjusting the Fed can provide a short-term stimulus or regulation for the economy, but it's useless for dealing with more systemic problems. The way we've been using the Fed for the last fifteen to twenty years is sort of like treating chronic fatigue syndrome with caffeine.

I'm encouraged by Obama's plan to invest in our infrastructure as a means of economic stimulus. Working on our infrastructure, building roads and bridges, can provide real long term economic stimulus that no quick-fix can.

We need to invest in and develop the means of producing our economy rather than relying on mathematical tricks.

We must develop the means and the discipline of controlling our economy rather than just letting the free market take us wherever the hell it wants to go, because where it wants to go isn't always where we want to go.

2 comments:

Nicole Bradshaw said...

I agree that the missing piece from the free market is individual discipline/responsibility. People do not function well when there are no rules. In those cases, might makes right, and how civilized is that?

A. Boyd C. said...

Some animals are much smarter when they work in groups. An ant colony, for instance, can achieve incredible feats of engineering and architecture that no single ant can.

Human beings, however, are much dumber working in groups. A mob makes mistakes no single person working alone ever would.

A free market can achieve remarkable things, but sometimes it acts like a mob, and that's when we have to step in and control it for our own sake.