Obama stimulus could reach $1 trillion: (whats another trillion)

NEW YORK (Reuters) - President-elect Barack Obama’s team is considering a plan to boost the recession-hit U.S. economy that could be far larger than previous estimates and might reach $1 trillion over two years, the Wall Street Journal reported on Saturday. Obama aides, who were considering a half-trillion dollar package two weeks ago, now consider $600 billion over two years “a very low-end estimate,” the newspaper said, citing an unidentified person familiar with the matter. The final size of the stimulus was expected to be significantly higher, possibly between $700 billion and $1 trillion over that period, it said, given the deteriorating state of the U.S. economy.

The point is with all this spending you either have: A huge debt, that will make things worse for future generations A dollar that’s worthless.

What’s going to happen when China says “no more” and stops lending us money?

the show NY Wrote: ------------------------------------------------------- > What’s going to happen when China says “no more” > and stops lending us money? not very likely - who would buy the constant stream of goods flowing out of China? It is just as much in China’s interests as the USA’s that the average consumer keeps on consuming. Of course eventually the whole shit-shamozzle is going to fall apart but that’s a long long way away.

I have never used trillion in anything until this year. Now, I think I hear trillion on a weekly basis.

I used to think this is bad, but I now suspect that, provided that the money flows quickly enough, the massive evaporation of money supply that accompanied the fall in asset prices creates an opportunity to print money without the normal concerns of hyperinflation. The interesting question is whether to use monetary policy or fiscal policy to make up the difference. Fiscal policy has the advantage that you can presumably control how those new funds are used and hopefully channel them into effective structural adjustment policies, but the downside is that it risks higher interest rates from the “crowding out effect,” the monetary solution doesn’t have the crowding-out problem, but is less likely to provide the structural adjustment incentives that the country needs. I’ve been trying to turn this into a blog piece, or perhaps a white paper, but it’s taking a while to put the argument and the data together.