The Economy

[kandrathe]

I was reading an interesting article in Forbes regarding the ARRA, which is that $787 Billion Dollar bill rushed through Congress without anyone reading the final version. The record breaking largest spending bill in the history of humanity, and the one that plunged the US debt further towards the point of no return.

First, the writer is an optimist, so I'm not quite following him on the whole rose colored scenario of "the storm is over", now we can go out and survey the damages and rebuild. He says, "Employment loss is slowing considerably from its levels earlier in the year; industrial output loss has slowed substantially (including the hard-hit construction sector); the stock market has risen nearly 40% since early March and Federal Reserve actions have stabilized the banking sector; and, in fact, several Federal Reserve bank stabilization programs are now being reversed."

But, what did catch my eye was where he said, "In fact, the 1930s Keynesian model that was used to sell the idea of fiscal stimulus to Americans was eliminated from economics decades ago. And this abandonment of Keynesian multipliers does not reflect any ideological or partisan issues that divide conservatives and liberal economists. Rather, it is because the old Keynesian model does not come anywhere close to meeting today's standards for economic analysis."

He ends the article on the pessimistic note, which I can appreciate, saying "Our current crisis may soon be over, but we are in the process of creating a debt crisis of substantial proportion, and one that is not cyclical but rather is permanent. A sensible resolution of this debt crisis fundamentally requires reducing federal spending. This should start by revisiting ARRA."