Fed Chairman Discusses Passing Another Stimulus Package

Fed Chairman Ben Bernanke suggested today, while testifying before the House Budget Committee, that Congress should consider passing some sort of economic stimulus package that would improve access to credit by homebuyers and other borrowers.

Here’s what Bernanke had to say:

As I discussed earlier, the extraordinary tightening in credit conditions has played a central role in the slowdown thus far and could be an important factor delaying the recovery. If the Congress proceeds with a fiscal package, it should consider including measures to help improve access to credit by consumers, homebuyers, businesses, and other borrowers. Such actions might be particularly effective at promoting economic growth and job creation.

The AP says that House Speaker Nancy Pelosi announced that Congress was considering an economic recovery bill as large as $150 billion, but that economists have said that the package would have to be twice that size.

The AP says:

Bernanke’s nod for another round of stimulus comes after a flurry of drastic actions by the Federal Reserve and the Bush administration has yet to unlock lending and calm financial markets.

Banks fear lending money to each other and to their customers, creating the worst financial crisis since the Great Depression. Businesses are reluctant to hire and boost capital investments. Consumers have hunkered down. All the economy’s problems are feeding off each other, creating a vicious cycle that Washington policymakers are finding difficult to break.

Bernanke: Fresh stimulus worth considering [MSNBC]
Economic outlook and financial markets [FED]

Comments

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  1. lodleader says:

    *facepalm*

  2. Mr_D says:

    Oh boy! Let’s dig this hole even deeper!

  3. Dr Steve Brule says:

    Fresh stimulus…what I normally do after drinking a pot of coffee at 8am.

  4. Bladefist says:

    This has absolutely nothing to do with the election of both President, and Congressional seats. Nothing.

    • TorrentFreak says:

      @Bladefist:

      It will after we vote out every idiot that voted for this god forsaken “bailout”.

      So much for “Republican” principles.

      • TouchMyMonkey says:

        @TorrentFreak: Really? I thought it was what the GOPers were all about. Privatize the profits, socialize the losses. We screwed up; we trusted them. Of course, by “we” I really mean the 60-odd million people who were dumb enough to vote to send George Bush back to Washington for a second term.

        • OletheaEurystheus says:

          @HurtsSoGood: As much as I liked to blame the Republicans for the bailout (and really I would because they where in fact the direct cause of this mess as much as they want to spin Clinton in on it despite the fact that THEY owned the legislative branch during the term they claim the cause came from) The Democrats where the ones who really hands down voted for the bailout. Both sides had a number of people who voted no though, but the republicans more so than the dems.

        • Bladefist says:

          @HurtsSoGood: The GOP is not all about that. Some politicians who are hooking up their friends, may be about that. I am not. The little guys, aren’t.

          As far as re-electing Bush, I don’t see what that pertains too. I don’t feel like he _caused_ anything. I feel like he responded poorly to things that were not caused by him. As far as John Kerry is concerned, what difference does it make? As far as the recent economic crisis, it appears most of our congressional reps are pretty much all agreeing on the bailout, and the one party you would think that would be against it, would be the GOP. Kerry especially, being a democrat, would have done the same. I’m one the who should be mad at Bush, not you, he did what liberals want done? You guys confuse me so much.

          • Trai_Dep says:

            @Bladefist: It’s wryly amusing that you compare alternate histories where Kerry won, but not Gore (well, he won, but…).
            The simple fact is that the tracks laid down by Bush’s first administration set the US’ course to where we are today. It took ‘em seven years, but their Free Market Fundamentalist ideology did what bin Laden couldn’t dream of doing to the USA. By 2004, the die were already cast. For that reason, I’m actually glad that Kerry lost. Just imagine the gleeful finger-pointing that would have ensued…

            • Bladefist says:

              @Trai_Dep: The free market works. I’m sorry it hasn’t worked for you. The free market didn’t create this. Government made Fannie/Freddie and regulations making banks give loans to people who cant afford them.

              Free market works. If it was allowed to work.

              • Trai_Dep says:

                @Bladefist: Like guns, a regulated free market works. Unregulated free markets tend to shoot themselves in the foot pursuing quarterly profits and/or slide towards oligopolies/monopolies.
                The “shadow banking system” is precisely what imploded, precisely because there wasn’t transparency, reserve requirements or regulations saying indirect parties couldn’t place side-bets on hedge positions.
                And, show me anywhere (besides Rush Limbaugh’s diseased mind) where the gov’t told banks, “make bad loans”. They simply said, “stop using discrimination as part of your business model, sleazebags”.
                Oh, regards Fannie/Freddie: McCain’s #1 guy: totally in bed with them, receiving millions in lobbyist funds, to this day. So, hardly a Dem-only issue. It’s a failed-ideology-yet-again-crashes-on-the-shores-of-reality issue. Sort of like NeoConservatism.

                • Trai_Dep says:

                  @Trai_Dep: Dang. I guess Gawker boxes don’t like too long of words. Ahem. “It’s a failed ideology yet again crashes on the shores of an unforgiving reality” isssue.
                  *blush*

                  • Bladefist says:

                    @Trai_Dep: You are in so much denial its hilarious. I could point out 9000 ways its the democrats fault for the majority, but here is the best one: Seen any big hearings? Seen any congress investigations? Anybody lookin into what caused this and prosecute those who are guilty? Nope. Turns out, democrats dont like to investigate themselves. If you could pin it to a republican, there would be hearings flying out your ass, just like there were when oil went up, or when some guy takes steroids. Weak. Pathetic.

                    And the gov’t didnt say “make bad loans.” The government said, “Do away with the 20% rule, and we’ll back you up”

                    Go back into denial man. I can debate on some things. But if you don’t think the democrats take credit for the housing blow up, you’re out of your mind. I thought that was well known and over. I guess a few of the party loyalist refuse to accept it.

                  • Bladefist says:

                    @Trai_Dep: Don’t forget Gonzales either. The #1 way to know when democrats are guilty: No investigation hearings.

    • AtomicPlayboy says:

      @Bladefist: As I’ve been saying when people ask me to justify my skepticism of the motivations for and value of these bailout measures: Does anyone think that the same solutions would have been proposed had this meltdown occurred in, say, January? We voters need to give Congress a hard reboot, vacating the seats of every opportunist who supported this loathsome measure so that future representatives will, when considering a similar boondoggle, “remember what happened to everyone in ’08”.

      • mac-phisto says:

        @AtomicPlayboy: nice in theory, but we americans have very short attention spans (& even shorter memories).

        be happy if more than a few of us remember what makes nov. 4th special in the first place…

      • Jesse says:

        @AtomicPlayboy:

        Overspending, pet projects and fiscal mismanagement is nothing new with Congress. Senators and Congressmen get reelected by showing how they brought the most money home to their constituents. Replacing everyone will just change the faces and do nothing to solve the underlying spending issues with Congress.

        • Bladefist says:

          @Jesse: Ya I agree. The 2-party system will continue to leave us screwed. And the republican party is moving to the left, and some day, their will be one party. Then we wont have any choices.

          /takes off tin foil hat.

  5. deadspork says:

    I don’t think they realise that things ARE going to get bad, and we ARE going to have to just ride it out.

    There’s nothing the government can do to save us now.

  6. timmus says:

    I’ve been running an ecommerce site for about 12 years now and we saw a really profitable month in September followed by an alarming dropoff in sales starting a few weeks ago. A lot of people on webmasterworld are reporting the same kind of trend. This to me indicates some sort of psychological effect going on with consumer spending, though strangely enough I’ve read very little about people explicitly saying they’re cutting back on spending. Perhaps people are under financial strain, and they can only make the minimum monthly payment on a maxed-out card, thus they’re staying afloat but unable to spend.

  7. opsomath says:

    So, what will y’all be doing in the post-collapse apocalypse? I’m thinking of investing in a ramshackle compound surrounded by barbed wire and burning trash barrels, and a motorcycle.

  8. Dobernala says:

    The ship is sinking…

  9. full.tang.halo says:

    *runs and checks stock market*

    Yep Ben Bernanke lips start flapping and the DOW goes down. Anyone who hot glue guns this chumps lips closed with be forever my friend.

    • SabreDC says:

      @full.tang.halo: I don’t know what is worse: that an index of the stock market dropped because one guy spoke or that people generally think the economy, as a whole, is in shambles because an index of the stock market dropped when one person spoke.

    • Jesse says:

      @Bladefist:

      I would have to disagree. The problem is not a byproduct of executive or legislative initiatives, but the “solutions” put in place will be influenced heavily by who becomes President and what the balance of Congress looks like.

      If you read what Bernanke is saying, he wants any future stimulus to be targeted towards increasing access to credit. However, the Democrats proposed stimulus package would be one of aid to states, foods stamps, jobless benefits, and infrastructure spending. They are two completely different approaches. I have to disagree with the Democratic plan since it doesn’t go after the problem at all, but merely throws money around and I would argue would extend the broader issues with the economy.

  10. TecmoTech says:

    Why do they want to rush to give more people credit? Isn’t the lesson learned by this mess “buy only what you can afford”?

    Banks shouldn’t be lending to those who cannot afford to pay back the debt. Where are they going to find this new pool of responsible borrowers?

    • dragonfire81 says:

      @TecmoTech: My thoughts exactly, making it easier to get credit is the key thing that led to this mess in the first place.

      • humphrmi says:

        @dragonfire81: Intentionally keeping all credit markets tight due to some bad borrowers is, to borrow a phrase from some of our political candidates, using an axe where a knife is needed.

        The credit markets are frozen for everyone, good and bad users alike, that’s the problem. Businesses that require short-term lending to ride out business cycles can’t borrow on the corpoate paper market.

        Well qualified buyers who want to buy homes in the cheapest housing market in recent history are unable to, due to the credit freeze.

        Not all borrowers are “bad borrowers”. Sometimes you need to borrow money for a good reason, and those borrowers (or most of them) are locked out right now, creating a self-feeding spiral of economic bad news.

        • drrictus says:

          @humphrmi: Good borrowers are locked out because the lenders got burned by bad borrowers, and the lenders have retreated. That’s what is supposed to happen. You know, “fool me once, shame on you,….”

          • humphrmi says:

            @drrictus: True, but what’s happening today is irrational panic where banks refuse to lend to anyone.

            I sympathize with your message though; I’m a free market believer myself, Milton Friedman posters hang from my walls.

            But even Friedman agreed that there were times in history when it was proper for the government to intervene to try to “backstop” the pendulum-like swing of the market.

            An Econ teacher (who was also a Friedman follower) explained it to me this way: Picture the (pre-crash) economy as this big bulky blob suspended by a crane over a pool of water. When the crane broke, the blob dropped into the water and sunk down, due to its velocity. Eventually, the “invisible hand” of nature will allow the blob to float freely in the water, but right now it’s bouncing up and down, trying to regain its equilibrium.

            What the government is doing by injecting capital into the economy is sort of like adding tons of salt to the water. Objects float higher in salt water, and also find their equilibrium faster.

            Now of course the sane thing to have done would have been to not prop up the economy (“hung it from a crane”) to begin with, and not kept throwing more weight into the blob. Or even maybe add salt to the pool of water before the crane broke. Whatever, that’s water under the bridge now (it’s a joke, son…) Now what the government is left with is a bobbing economy and the only tool they know how to prop it up, and force it to try to find equilibrium.

            • Trai_Dep says:

              @humphrmi: Good analogy. It’s like traffic: there’s no way to figure out every nuance and anticipate every driver’s action, nor would (should) anyone want to try to.
              Instead, rely on the wisdom of crowds. Use the gov’t to set forth broad rules that ensure traffic keeps moving, that everyone has access equally, that no one takes advantage unfairly and the rules are known ahead of time with reasonable assurance that scofflaws will be sanctioned.
              Then let the gov’t get out of the way. It’s done its job.

    • jaydez says:

      @TecmoTech: That is only the lesson if your friends are the ones in debt, not the ones running the banks who make a profit off your debt…

      Guess which category ol’ Ben falls into.

  11. mac-phisto says:

    you’re not going to fix the problem without addressing the 2 main causes of it – job loss & foreclosure. reversing the trend of layoffs isn’t going to be easy, but gov’t investment in certain segments of our economy to promote growth (particularly energy development & infrastructure repair) are a good start.

    prevention of foreclosure is a sore issue. there are a lot of folks (especially on this site) that don’t support throwing drowning homeowners a lifeline, but without a workable solution for these people, there’s really no point in dumping more money in the mix. it’s not necessarily a lack of credit that’s seized up the housing market – it’s dropping home values that leave homeowners unable to sell & homebuyers unable to get financing for asking price. if you want to stabilize home values, you have to stop foreclosure.

    • TecmoTech says:

      @mac-phisto:

      Stabilizing home values is not a good idea. They are still seriously inflated in most parts of the country. Look at the average household income vs average home price. The numbers you see there explain the main issue.

      • mac-phisto says:

        @TecmoTech: yeah, i had a whole paragraph on that, but i deleted it b/c i was getting a little long-winded.

        if you don’t want to stabilize home values, then there’s really no point in throwing more money at the wall here, b/c it’s not gonna stick. the way i see it, you can either allow home values to deflate & expect a protracted period of economic contraction over the next 3-7 years, or stabilize home values & reduce the impact on the economy as a whole. but i don’t see how you can have it both ways.

        also, i don’t necessarily agree that home values are inflated so much as our incomes have stagnated or declined over the past 25 years. essentially, it’s saying the same thing, but it’s a question of what needs to change – home values or salaries. personally, i’d rather make more money than pay less for a home. ;)

        • TecmoTech says:

          @mac-phisto:

          I just think its ridiculous that the average family in America can’t afford a home. It’s not like the cost a ton to build especially most of the cookie cutter crap going up these days.

          I had a radical idea that would stimulate the economy: 25% debt forgiveness on ALL mortgages. It would put more spending money in people’s pockets, drop existing prices for future home sales (comps would show neighborhood houses were valued 25% less than before), more homeowners spreads the burden of property taxes, easier to acquire loan for smaller amounts… etc.

    • FLEB says:

      @mac-phisto: I’d heard about the idea of reducing mortgage principle as well as interest rate, and I’m actually a bit surprised that the banks haven’t voluntarily taken on this task. With more and more foreclosures piling up at their doorsteps, and the fact that the value of that property is less than the loan, no matter who owns the property and the loan, it seems like banks would be more interested in taking the losses while maintaining an income-bearing relationship, rather than taking what are surely going to be similar losses, meanwhile also having to deal with forclosure and eviction, then owning and trying to unload the rapidly deteriorating property themselves.

      • TecmoTech says:

        @FLEB:

        Beautifully written. This idea helps all.

        1. Helps responsible future homeowners because houses are now more affordable (realistically priced). Basically, this gets us to where we need to be at a much faster rate than waiting for it to happen.
        2. Helps noob homeowners who got suckered into bad loans.
        3. Helps economy.
        4. Helps banks by keeping existing relationships and gaining new business. Yeah, they will be bruised, but will come out better in the end.

        It’s a win-win-win-win.

        • mac-phisto says:

          @TecmoTech: the only people it doesn’t help are people who don’t have a problem (the majority of homeowners out there). that’s really the problem with any type of mandated help for troubled homeowners. responsible people feel victimized by not “taking advantage”.

          what a sad society we have become when even the fortunate put out their palms & expect alms.

        • Trai_Dep says:

          @TecmoTech: Unless you’re part of the majority of citizens that don’t own a home. Then it’s welfare for the (relatively) rich. And would this be paid by the gov’t? That’d be that majority of non-homeowners paying for the windfall for the (relatively) rich. Unsure of how equitable that is.

          • TecmoTech says:

            @Trai_Dep:

            I don’t own a home, but I’ll be damned if I am going to pay current prices. They are too unrealistic. I guess MacPhisto pointed out that this doesn’t help group very much – current home owners with no mortgage. It would minorly impact their property taxes but that is about it.

          • Ratty says:

            @Trai_Dep: No doubt. I don’t own a home because I know I can’t afford to. Being forced to have my tax dollars bail out people who didn’t refrain irritates me greatly. And it certainly makes me think I should have milked the cow since good ol’ Uncle Sam seems all too willing to bail out anyone who spends beyond their means. All it does is reinforce the piss poor habits that made the situation so dire.

      • mac-phisto says:

        @FLEB: & why should they care? the gov’t has proven all too willing to cut them a blank check for doing nothing. i agree, it’s a good idea & the fhasecure program had an element of loan forgiveness built into it, but banks must either be unwilling or unprepared to participate b/c the program has had little effect thus far.

  12. Courteous_Gentleman says:

    Oh boy, more free money!

  13. Urgleglurk says:

    “Fool me once, shame on you. Fool me twice, shame on me.”

    Am I the only one that sees the swine returning to the trough for another serving?

  14. JoshMac says:

    Where does a country that’s broke get the money for a stimulus package? We already had the 700 billion bailout that came from…well probably China that we can look forward to paying off. Now a stimulus will come from…well China. I guess America won’t be happy until China is ruling the US.

    Let the economy hit the bottom, government needs to stay out of the way and stop prolonging the inevitable. Our money is gone and we have to live with the change. We can’t keep acting like everything is the way it was, the way it was is how we got here. Comprendé?

    • TannerBrutus says:

      @JoshMac: Our economy is based on credit, not goods and services. It becomes a commodity itself, instead of representing something of value (goods or services). It can be created at will by those who issue it (the Fed). Here’s a brain twister for you… If everyone, the gov’t, consumers, businesses, banks, paid off their debts, there would be no more dollars left in the economy. That’s because money is based on a promise to repay, not an asset. The more borrowers there are, the more dollars there are. If no one was in debt, there wouldn’t be dollars. That doesn’t mean the economy would stop, it would just be different. And perhaps for the best.

  15. K J says:

    Personally, I see myself falling for the hype and cutting back on unnecessary expenses. (Which would have been a good idea anyway.) I don’t have much faith in any of the government or media reports right now. Frankly, I think all the governmental bailout (takeover) efforts are just causing more water to build up behind the dam. God help us all when it breaks.

    And yes, I’m know I’m paranoid and cynical.

  16. FuryOfFirestorm says:

    *shakes fists in anger*

    “Damn you, Bernanke! Damn you to HELL!”

  17. ilves says:

    My pockets say yay, my brain says noooooooooo!

  18. LoriLynn says:

    This won’t work under McCain’s “spending freeze.”

  19. Mayor McRib says:

    I thought the first bailout was supposed to fix these credit issues? Before you tell me that it hasn’t and it’s going to take time, why don’t we wait it out long enough to realize that we just wasted our money the first time. Our economy was slowly eroding over the last few years, it has now come to a boil. You can’t fix it without letting it cool off for a while and unfortunately the boiling water is going to leave some burns.

  20. punkrawka says:

    I gotta get one of those magic money trees that the government seems to have.

  21. trk182 says:

    The sky is falling!!!!

  22. Trencher93 says:

    Give people MORE access to EASY CREDIT? Is he nuts? He wants the stimulus package to focus on consumer credit and HOUSING!?

  23. SpdRacer says:

    From the NYT: “…Democratic and Republican lawmakers alike have elected to pay the bill mainly by borrowing money rather than cutting spending or raising taxes. But while the borrowing is relatively inexpensive for the government in a weak economy, the cost will become a bigger burden as growth returns and interest rates rise.”

    So, yeah lets go spend more money we don’t have now and won’t have in the future, because any monies we get will have to be applied to this mess!

  24. Trai_Dep says:

    The problem is that there are two huge problems.
    #1 is the ravaged US banking system that unfettered Laissez-Faire principles racked on the global economy. It screwed up things so badly that the only way to hope to fix it is that we had to largely nationalize our banking system. Much in the same way that when parents let their kids play unsupervised with gasoline & matches, the firemen then have to come in and take an axe to the basement and knock out the non-supporting walls else the fire will consume the house.
    Blaming the fire department for this is obviously the wrong tact.

    #2 is that we’re entering what looks to be a severe, prolonged recession. That’s what good ol’, reliable Keynesian economics can fix: prime the pump. That’s why throwing billions at Wall Street bankers isn’t enough. Stimulus payments to us proles is also needed. Using the house analogy, it would be our fire-wracked house also needing rewiring, since the same kids that torched the house also ruined the electrical: merely replacing the walls w/o fixing the wires will result in a ruined house.

    While the deficit is an issue, it’s less of one than the above two crises. Ones that a failed ideology which was given a fair (too fair, I’d say) shot to succeed.

    On a different, related note: how many people so VERY concerned with deficit spending now were equally concerned when the GOP turned our surpluses into vast deficits, with Greenspan cheering it on? Argued, say, against the no-bid, billion dollar Iraq/Katrina contracts, the gold-plated, useless Pentagon projects and the Medicare no-negotiation prescription plan?
    If you weren’t, then you have NO right to complain about them now, when they’re actually needed. Get some perspective and accountability, people. :)

  25. RedwoodFlyer says:

    Moving to Finland, rooming w/Santa – drop me a line if you want to split rent.

  26. Certainly_Cake says:

    You cannot protect real estate values–they are doomed to collapse even further. The problem in the coming months isn’t going to be foreclosures, but people making the rational decision to walk away from their vastly over-sized mortgages.

    There is a massive amount of phantom wealth on the market. This “wealth” only exists on balance sheets. We are in a crises because it gravely and purposefully mis-valued real estate. Banks have realized that the notional value of the mortgage no longer represents the real value of a piece of real estate. When homeowners (Or rent-to-owners) realize this, then the fur will really begin to fly.

    Housing will continue to retreat until the prices more accurately reflect the real value of the real estate. The fundamental utility of a home is that it provides shelter, privacy, and a place to live.

  27. hi says:

    Stimulus package: Strike 1.
    700 Billion Dollar bailout: Strike 2.
    Stimulus package #2: Strike 3.

    YOUR OUT!

  28. crouton976 says:

    @deadspork:

    “There’s nothing the government can do to save us now.”

    Actually, there is. STOP F*&^ING TRYING TO SOLVE THE PROBLEM, AND LET THE MARKET CORRECT ITSELF.

    Our government tried to do the same thing during the Depression, and nothing worked. Ron Paul says it best,

    “It’s the same destructive strategy that government tried during the Great Depression: prop up prices at all costs. The Depression went on for over a decade. On the other hand, when liquidation was allowed to occur in the equally devastating downturn of 1921, the economy recovered within less than a year.”

    If everyone has to slash prices just to sell their product and keep from going under, that product becomes more affordable. If it becomes more affordable, more people buy it. If more people buy it, our economy that so heavily relies on consumer spending will be bolstered, and we will come out of this recession/depression/meltdown/dawn of the 4th apocalypse.

    While the liquidation of our economy might be rough and, pardon the pun, depressing, things will turn out better in the long run. If you want to get in shape and build muscle, you have to sweat and go through aches and pains.

    • crouton976 says:

      @crouton976: Also I might add, to further my illustration, since gas prices have come down, how many readers here at consumerist have bought more gas than you have been, even if it’s only to keep your tank full for when prices start to go back up?

    • crouton976 says:

      @crouton976: One more thing…

      If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, (i.e., the “business cycle”) the banks and corporations that will grow up around them will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.”

      thomas jefferson

      I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilized world. No longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men.

      ~ Woodrow Wilson, 1916,
      in reference to his signing the Federal Reserve Act of 1913

      ’nuff said…

  29. MainframeSysop says:

    I think as a country, we should repeal the Bailout and take that 700 Billion and make THAT our stimulus package. Give every homeowner or every adult over 18 $200,000 and then WATCH THE ECONOMY GO! I know I would pay my mortgage off and buy tons of crap. The money was given at the wrong end of the spectrum. The economy is driven mostly by the consumers… thus this forum… the Consumerist. :)

  30. Invective says:

    The President has already said he won’t be signing another stimulus package. He has two months to go, his lack of popularity pretty much couldn’t get any worse and so he’s willing to take another hit for the team. I have *no* idea how that man can call himself a Christian, but I digress…
    Congress is going to spend about 2 trillion, (Same hit to the American economy as the twin towers going down, which was 2 and half trillion last I saw.) and some people here are worried about a little 300 billion in economic stimulus. Not to mention all the money goes back in the system anyway.
    No, it probably won’t happen, if at all, until after the President exits office and hands the worst economic situation since the depression to the next guy. This suggestion is as empty as a bear coming out of winter hibernation. It’s a laughable attempt to say congress didn’t want to do the economic package and save a little face for the Administration while doing it.
    Thank God for corruption though, it’s the only thing holding our country together. The supposed ‘experienced’ old guys got walked on by all the corruption and greed. They can take their PAC money and go! I’ll never vote for another old ‘experienced’ white guy again. I don’t know about you all, but I think I’ve had about enough experience with my pocket book I can handle. Don’t get sick! Take it from me! I’ll take a young new guy any day of the week and twice on Sunday.

  31. sonneillon says:

    If we are spending imaginary money I want to be enriched by it.

  32. axiomatic says:

    Can I get some of what Bernanke is on? It’s apparently really GOOD stuff!

  33. TannerBrutus says:

    What many people don’t realize is that our “money” has been an experiment since the mid 70’s. Paper money used to be representative money, meaning that it represented a tangible good. Tobacco, gold, siver, tea, etc. were all used to back a bank note which represented it. Inflation came into existence when banks issued too many of these notes, and there wasn’t enough of the hard asset to back it. This causes the value of each note to go down, and the ones in peoples pockets or savings didn’t go as far as they once did. It’s the law of supply and demand. Too many notes (supply) in relation to not enough of the asset (demand). Any one could be a bank if they had an asset to issue paper against. Money was not issued by any single source. If you didn’t believe a particular bank and their notes were solvent, you didn’t have to accept them.

    Today, we’ve been lead to believe that the gov’t prints our money. It does not. A particular private bank was created and empowered by the gov’t with legal tender. This created a gradual monopolistic control over the money supply. Our gov’t is in debt to this bank. Since our gov’t represents us, we are in debt to this bank. Taxes are the payment.

    To make matters worse, since the mid 1970’s, the Fed has been allowed to create their notes without any backing. Remember those silver certificates from way back? Our money was backed by gold and silver. Since the mid 70’s, it’s backed by the “full faith and credit of the Federal Governtment” (and its ability to collect taxes from it’s citizens). They are essentially worthless, but get their value based on people’s perception of their worth. Today we see that people are not so trusting, and it drops overnight. Remember supply and demand? When they start pumping the supply, it will drop even more. This happened in Germany before WW2. a huge stack of paper money was worth less than firewood (see photo).
    In the graph, you can see that ours is following the same trend.

    http://i362.photobucket.com/albums/oo63/allthatremains03/Goldstandard-Wikipediathefreeencycl.jpg

    http://i362.photobucket.com/albums/oo63/allthatremains03/1WorldReserves.gif

    What was sold to the public as “stability” has really just created a monster. Economics is like nature. No, actually it IS nature. 50 years is a drop in the bucket for the earth and its resources. If you screw with it, it will come back 10 times harder to bite you in the ass.

    Not that we can’t have all the things we enjoy today, we just need to create them in a way that follows the laws of physics. Economics included.

  34. doodaddy says:

    “…the extraordinary tightening in credit conditions … could be an important factor delaying the recovery.”

    The problem with statements like this is that it assumes the maximum position of the market must have been “correct” and anything lesser must be a “problem”. In fact, the market was overheated, and by many standards, is still overheated. You can’t stimulate it into being overheated forever. It must come back to trend.

    It is, despite the objections of wishful thinkers, a zero-sum game. Money didn’t disappear. It went into the hands of home sellers and investment bankers. If you want it back, go talk to them.

  35. Verucalise (Est.February2008) says:

    I’m sorry, but this just looks like a bunch of politicians trying to slooooowly peel off a bandaid, trying to do this with the least amount of pain.

    I didn’t believe in this bailout plan – I believe(d) the markets had a chance to recover slowly by themselves. By passing this bailout plan, we created more panick than was necessary.

    As for another stimulus package- people are barely able to pay their bills right now. Luckily, we haven’t been caught in this vicious circle but a lot of my family members have. And even THEY don’t want another stimulus package.

  36. vladthepaler says:

    Because the biggest problem USA faces today is that its debt isn’t big enough, and its money is worth too much. We should all applaud our legislators for increasing our debt and decreasing the value of our money.