Tyler Cowen has an interesting bit up on the Japanese experience of the 90s with fiscal stimulation.
Also with a link to Greg Mankiw’s blog — a comment from a government worker, talking about how much money was wasted at DHS in the 2002-03 period.
I just have no confidence that the government is going to spend money on anything really worthwhile, and that the private sector could not or would not itself finance.
As many of you know, I think we are in a long term down cycle. We’re about halfway through it, in fact. Frankly, if the government wanted to do something constructive, they could just start handing out crisp 100s to everybody. Of course they won’t do this. (Hmm.) So given Saint Barack’s proclivities I’m sure we’ll be seeing “demonstration projects” of one kind of another going on. Ugh.
Visit the Virtual Galt website
[...] On Stimulation « Observations From Virtual Galt Tags: Deflation, Quantitative easing, stimulate, stimulation [...]
Generally this means the Federal Reserve has no more room to lower interest rates, and just starts up the printing press, flooding the market with money. Typically the Fed uses this new money to buy government debt (Fed buys a bond, former bondholder gets cash). Bernanke has before talked about printing money to buy US equities too. Perhaps this was a “worst case” he had in mind.