I’m really coming to the conclusion that Geithner is an idiot, not just a misguided globalist who wants the IMF to run the world.
While he and the Federal Reserve’s Bernanke are holding interest rates as close to zero as is possible, Geithner now says he wants Americans to save more. Why would people save more money to earn 1% interest? or lock in for a longer term when most people expect inflation to come back at some point?
At the same time we are being told to save money, the government is urging us to buy stuff we can’t afford (new cars, houses, appliances) to stimulate the economy. The government itself is spending money like a drunken Pelosi, and is considering a second stimulus package.
None of this makes any sense.
You’re darn right it doesn’t make sense. I’ve been griping about this ever since Bernanke tanked interest rates back in summer of ’08. As you recall, inflation for a brief time went through the roof and started the economy on its current downward spiral… conveniently enough, just as I was hitting the job market. I’m still unemployed.
I’ve long held the theory that if a recession is imminent and unavoidable, make it as swift and severe as possible to allow for a swift and rapid rebound. The longer a recession stagnates, the longer the unemployed have to wait to have a decent chance at getting a decent job, which leads to a lot of problems when they give up and take easier-to-get, but less productive, jobs. Swift recessions purge the system of the problems that creep in over the years. We saw a little bit of that in late 2008… the recession came quickly and fiercely, but the dollar regained strength, commodities prices such as oil fell rapidly, and things became more affordable. Instead of allowing that to take its course and set the stage for a more healthy rebound, our government leaders decided to mitigate the correction. The result? An unemployment rate that continues to rise, extensive book-cooking to avoid reaching that 10% mark (notice the big jump in “discouraged workers?”), oil prices not falling like they usually do in the fall, and general stagnation elsewhere… stagflation is on its way, folks. If they’d have just let things run their course, we could be well in the midst of a recovery right now, but no.