Economic Stimulus is Coming
Recently, Ben Bernanke forecast slower growth in 2008, but not a recession. However, he is not sticking to his guns.
America has called and Ben Bernanke, our venerable Federal Reserve chairmen is here to answer the cry for help after six months of national fitful sleep. Both sides have decided that an economic stimulus package is necessary to avert recession for the recession that is already six months old if you listen to the likes of Goldman Sachs. Bernanke spoke in the typical fashion that such a plan should be “quickly implemented and temporary” so that the plan will not destabilize the economy. Bernanke was clearly supportive for the general concept of an economic rescue package, but was shy about endorsing a particular plan: leaving that for the politicians and staff economists to decide. “Fiscal action could be helpful in principle” and may provide “broader support for the economy” than the Fed can furnish alone through reductions in interest rates, Bernanke said. However, “the design and implementation of the fiscal program are critically important,” he said. While design and implementation are critical, Bernanke is leaving this decision to the politicians. Of course, the Federal Reserve will be supplying the fiat currency for whatever the politicians and staff economists think best.
The White House woke up after watching a number of indicators of a battered economy. Consumer confidence has plummeted and economic woes have become the top concern of the American public because of the public focus on the banking/mortgage banking crisis. Naturally, the 2008 presidential candidates are scrambling to evaluate and give their input on the crisis as everyone looks for a cure. In direct terms, Bernanke declared, “We stand ready to take substantive additional action as needed to support growth and to provide adequate insurance against downside risks. Stimulus that comes too late will not help support economic activity in the near term, and it could be actively destabilizing if it comes at a time when growth is already improving,” In other words, Bernanke thinks initiating this plan is pretty tricky.
The Associated Press counted down a dismal list of economic mishaps as they reported on the general announcement early Thursday morning. Meanwhile, the political wheels are spinning as decisions are being made about exactly what should be in the economic stimulus plan. Remember what Ben Bernanke said. Implementing this stimulus plan could further destabilize the economy. That is caution and openness speaking. Yes, this plan is tricky. I’m glad that this economic stimulus plan is such a good idea.