Comments on: Deflation, Inflation, and Money from Thin Air

By: Nanette (Mom)

Nanette (Mom) — Wed, 18 Feb 2009 23:20:44 +0000

May I make some simple, and perhaps naive, suggestions to “stimulate” the economy that, it seems to me, would be more productive than spending our nation into oblivion:
1) Encourage entrepreneurship by increasing SBA loans
2) Encourage companies to keep American jobs at home through tax incentives
3) Enforce laws, and add new ones if necessary to keep illegals from holding jobs that should be filled by citizens or legal immigrants
4) Encourage prudent spending by individuals and government entities through example and tax incentives. (Cut unnecessary spending and use money more productively. The line-item veto, might be one option here.)
5) Allow unproductive companies to fail–it will be painful now, but not as painful as out-of-control inflation in a few years, which is what I fear our current policies will create.
6) Allow those who have huge mortgages that they can’t afford or are deeply in debt otherwise, to suffer the consequences and learn from mistakes. And allow banks and mortgage companies who have made bad loans to also learn from consequences! Housing prices need to adjust, and so do personal spending habits. (again difficult, but better now than when the problem becomes even bigger)
7) Hunker down and expect a few tough years, rather than creating a giant “house of cards” that will (in my humble opinion)inevitably collapse eventually.

By: Dave Justus

Dave Justus — Wed, 14 Jan 2009 18:39:31 +0000

I honestly don’t have any well formed ideas about this.

Infrastructure is an obvious area to look at, it seems to me that energy production would be a good idea especially if it is more economical energy. At the end of the day, modern economic growth is pretty strongly tied to energy.

I also like the concept of investing in people, especially more disadvantaged people, as there is a decent chance their innate talents are being under-utilized. Of course this is pretty long term, and creating programs that are effective in this area has proved difficult.

I don’t think that people spending vs. saving is a very good metric to worry about. In most cases, saving is just another term for investing (under the mattress doesn’t qualify, but putting your money in a savings account does) and invested money is both ’spent’ and also likely to contribute to future growth.

Like I said though, right now my thoughts on this aren’t real organized.

By: Bob Morris

Bob Morris — Tue, 13 Jan 2009 18:30:14 +0000

That’s a good question. I wish I had the easy answer for you.

I have read the arguments from some that spending the money on government programs where people are more likely to spend the money they get rather than save it. They usually point to welfare and social security. My issue with that is, if you give money to somebody intended for a basic need (food and clothing) that does not necessarily mean the person will start buying typical durable goods. A person who is needing more money to fill basic needs is going to fill those first.

Also, not every person who receives social security fits the picture of what some paint regarding people on fixed incomes. My grandfather would be on a “fixed income” but he is not struggling to make ends meet, but that seems to be the picture people toss around.

If the government is going to generate money to stimulate the economy, one possibility would be to funnel it toward public infrastructure projects such as roads, needed buildings (new schools where needed, for example) and other things that have a true benefit for the greater public good. I don’t know if that’s entirely the answer, though, and there will always be debate as to which such projects deserve the funding more.

Dave, I’d be interested to hear more about your ideas.