You're Getting Another $600B [Keynesian] Stimulus...

Whether you want one or not!  And that's a good thing, because if you haven't noticed the economy stinks right now. Now you might say to yourself, "Hey Ernie, when President Obama was inaugurated the Dow Jones Industrial Average was hovering around 8,000 points and now it's hovering around 11,000 points, that looks like a recovery to me!"   But I say that too many people are not working and Adam Smith's "Invisible Hand" is giving lots of ordinary working people a slap in the face.  "But Ernie, how is President Obama going to get through another stimulus package with a Congress controlled by Republicans, who are all in favor of massive deficit reduction?"

He's not going to get a new stimulus through Congress. But thanks to the saner and thanks-be-to-God "unelected bunch" over at The Federal Reserve, the board decided last Tuesday to purchase $600 Billion dollars worth of U.S. Treasury Bonds over the course of eight months. Because U.S. treasury bonds are essentially a fancy savings account for major banks, by purchasing these treasuries there will be less supply and banks will actually have to INVEST IN SOMETHING, thereby giving businesses some capital to create some jobbies.

And guess what, the markets LOVED IT. Tea Partiers hate it, Republicans pretend to hate it, and Democrats pretend that they don't like it either.  But Keynesian stimulus policy works and if the nincompoops in Congress are too afraid of the voters to do what's best for this country then we need to hope that the unelected institutions have the 'cojones' to do the right thing and get people working again.

Trust me, you don't balance the budget by having a 20% unemployment rate.  Remember, the basic definition of Keynesian economics is counter-cyclical government involvement in the economy.  So that means leaning in favor of job creation over deficit reduction.

I give you the new Speaker of the House - Republican John Boehner. As you can see, he's focused on reducing the debt and NOT extending the Bush tax cuts.

What to do about Cash-for-Clunkers program

So apparently the $1 billion program in the stimulus has run out of funds in a few weeks. The program provides up to $4,500 for qualifiying car purchases from trading in cars that are less than 25 years old with low mileage standards to new cars with higher mileage standards.

The House recently approved a new appropriation for $2 billion to be allocated for the program. I do not know if that is new money or just a bigger slice of the stimulus. Also, rumor has it that Senate Republicans and Blue Dogs are looking to kill the new House appropriation of funds.

Overall, I think this is an idea that is working. The fact that it ran out of money in a few weeks shows that it's working. And I think this shows where government can be effective if it's targeted well. The consumer gets $4,500 towards a new car which will save them money in the long run. The government gets old gas-guzzlers off the road and newer more environmentally friendly ones on, and to top it all off, the car companies and local dealerships get an increase in business, which hopefully sustains employment, or perhaps even increases it.

I can buy that perhaps the $4,500 per family may be a bit too much. The housing credit is $8,000 and that's for buying a house! So maybe in the Senate version they can approve the appropriation but perhaps lower the credit to $3,000, thus allowing more families access to this program. But I think killing it would be a bad idea.

Let me know what you think. I've posted a poll.