"John R. Carroll" wrote in message
...
Wes wrote:
"Ed Huntress" wrote:

snip


It's difficult to stimulate real growth with deficit spending. At
best, it might turn a decline around, but the effect is a weak one.
Stimulus is not about creating long-term sustainable growth.

AAAAAHHHH - Not exactly.
At least there is another aspect to this. What you defecit spend ON can
create the foundation for future growth and this is an important
consideration.

In theory, it can. In practice, it's very difficult, or maybe impossible, to
direct *enough* of a stimulus into projects that specifically lead to real
growth. You won't get anything but a fizzle if you try to make it all
infrastructure, or education, or other things that arguably provide a
foundation for growth. You can't move enough money, fast enough, that way.

The mainstream view, if I'm not behind on it (I haven't been reading
economics journals for a while), is that you really have to focus on how
money is going to move around, and who it is who needs that money to prevent
a crumbling of important institutions like home ownership, the credit
system, the existing education system and vital services such as police and
fire, etc. The Obama plan does a lot of that. It doesn't do a lot of direct
building of the economy; it keeps crucial institutions from collapsing.

So everyone is always in favor of stimulus that directly feeds real growth,
but no one has ever really succeeded in directing money that way in a
recession. I don't know of a way to do it, politics aside.

--
Ed Huntress