Ben Bernanke Behind a Second Economic Stimulus

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Mon, Oct 20 - 2:34 pm EDT | 6 years ago by
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What would you do if the government handed you a check for hundreds of dollars? We found out a few months ago what would happen — and it wasn’t economic stimulus. I wasn’t happy with the original economic stimulus payment because I didn’t think it actually addressed any of our underlying problems with credit and consumer spending fueled by debt in our country. A second economic stimulus would do about as well as the first one. Plus it would add a great deal to our national deficit.

But the folks in Washington have decided that the best way to show their dedication to Main Street while stimulating the economy is to provide a second economic stimulus payment. I’m right there with David at My Two Dollars when he points out that just giving us money is not the way to go about stimulating the economy:

If they want to create a fund to pay for road repair or fixing welfare or something like that, fine – work on it and go for it. But a second stimulus check/package is not needed right now, won’t change the dynamics of our economy…

I have to agree. Someone please remind how well throwing money at the problem — whether a Wall Street bailout or government programs — has worked in terms of actually solving problems. Oh, right, it hasn’t.

Ben Bernanke supports second economic stimulus — as long as we the consumers can borrow more money

Ben Bernanke is all about a second economic stimulus package. And, frankly, that worries me. Bernanke hasn’t been right about much since he took over the Fed. His vote of confidence doesn’t make me feel much better. But the really scary thing is what he thinks should be added to a second economic stimulus package, according to the Wall Street Journal:

Mr. Bernanke said an “ideal” package would not only boost spending and economic activity but would also offset the severe credit tightening, which has “the potential to extend or deepen” the slowdown. “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,” he said. “Such actions might be particularly effective at promoting economic growth and job creation.”

So not only does the top economic guy in the country think we should be given money with the intent that we should go on a spending spree, he thinks that we should be able to borrow more money so that we can go on a debt-based bigger spending spree. The reasoning behind this, of course, is that we are a debt-based economy. Our entire economy runs on credit and debt. This is a big part of the problem. What we need is new thinking about money, debt and spending.

Giving us the ability to continue the same destructive practices that got us here in the first place will only lead to greater economic instability and an even larger crash next time.

What are your thoughts on a second economic stimulus package?

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  • http://freefrombroke.com FFB

    I think it’s foolish to even think of a second stimulus check. Did the first help our current crisis? Nope!

  • miranda

    Thanks for weighing in FFB! Reminds me of that Einstein quote about the definition of insanity…

  • http://www.pongoresume.com/blogs/1/pongo.cfm Jennifer

    I have said this before, but I am always shocked that they are willing to throw money our way yet they can continue to take it away from schools. It is just really disappointing.

  • miranda

    I agree, Jennifer. I think our priorities in this country are a bit messed up.

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  • http://www.jobsearchdigest.com/investment_banking_jobs John

    The second stimulus should be not directly handing over the money, rather pumping in sectors – what Keynes suggested during the great recession of 30s. Money reaching to the hands of people at ease does not necessarily pump the market; it might result in large scale speculative saving. We might not be as bad as ‘The government should pay people to dig holes in the ground and then fill them up’, but Fed measure should aim at creating the backdrop of the market, not the market.

    John
    Investment Banking Jobs

  • miranda

    You are right, John, that the package doesn’t per se offer stimulus checks. But the idea has been floating around out there, probably to appease folks that would be upset to see MORE money pumped into business, and not given to people. I think that before rushing headlong into more “stimulus” measures, we should look at what is likely to be of benefit to our society, as well as stimulating to the economy. I think improving our infrastructure would be something along those lines. Unfortunately, most of what seems to be happening IS aimed at “creating the market” rather than, as you rightly say should be happening through creating a backdrop for the market.