Tuesday, March 03, 2009

Real Stimulus, cont'd

A friend responded to this post by saying:
there's only two ways out of this: kick start spending (the gov't is the only one with deep enough pockets to do that now) or drastically revalue assets. if we did the latter, almost every bank in america would fail.
I wanted to respond here and elaborate so my thoughts didn't get lost in the comments section.

The government is the only single payer with deep enough pockets, but that is the problem. I don't want one payer. I want 150,000,000 individual wage earners out there spending money. 70% of the economy is private individuals spending money. Isn't it better to give more power to the 70% than the 30%?

Having a FICA holiday for a year is the fastest and cheapest way to kick start the economy. I would get more than $700 a month to spend, save, or invest.

And the other thing is that there is tons of cash out there in the economy. No one is willing to spend it until the government has one plan and sticks to it.

As long as there is massive uncertainty about what Geithner and Obama will do (it's not like they even know what they are doing - every time either one opens their mouth about the economy the Dow Jones loses 300 points) everyone with cash is going to sit on it.

Just imagine if people making more money than me are behind on their mortgage and they get to keep more of their wages. They will catch up on their mortgage. Those who have no debt will be free to save or invest as they see fit.

That is the only fair and just way to do this. Otherwise, the wise stewards are bailing out the unwise steward and we just dig a deeper hole. Nobody wants to pay someone else's mortgage.

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