is it just me or are we back where we started before the fiscal stimulus

Discussion in 'Economics' started by morganist, Sep 15, 2009.

  1. i was just thinking that the fundamentals of the economy are still the same as they were before the fiscal stimulus. we all still have a lot of debt and now the government is in debt too.

    aggregate demand cannot be held up with new debt and it cannot be held up by continued government expenditure. so what now do you know how to keep demand high.

    so aren't we back where we started or worse in a twice as bad situation than before.
     
  2. i think this paper explains in part what i am trying so say with this post and on the investment and low interest post.

    http://faculty.chicagobooth.edu/john.cochrane/research/Papers/fiscal2.htm

    in short the banking system is failing does that mean the concepts and working of the failing is also wrong.
     
  3. it sure isn't the 'momentum' of rallies past driving the current market. It seems prices go up but reluctantly.
     
  4. are you saying the fiscal stimulus is working. if so for how long and what are the long term consequences.
     
  5. I was referring to intraday momentum of prices of US stocks. Really has a late 2007 "feel" to this rally.

     
  6. No no no! Bernanke says the recession is over! He would never lie to us! After all...He's the Fed chief and incapable of lying!
     
  7. i sense sarcasm.

    do you agree with my point though. debt for aggregate demand, debt for government expenditure, debt for investment. is any of that real.
     
  8. i think what i am really trying to say is investment from credit is not really beneficial as the advantages provided are taken away when interest rates rise, which happens eventually.

    therefore is the textbook position incorrect.
     
  9. aggregate demand cannot be held up with new debt and it cannot be held up by continued government expenditure. so what now do you know how to keep demand high.
    ------------------------------------------------

    On the surface this looks like the gov't is trying to keep demand high but the way I read this is the gov't is trying to support price in spite of lack of demand. From my point of view this is troubling.
     
  10. exactly how can they sustain demand or investment or anything. like i said we are back where we started before the fiscal stimulus. but now we don't have that option.
     
    #10     Sep 15, 2009