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Originally Posted by Max Thrillington
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Nikkei intraday high was just short of 39,000...?
There is no problem with running a deficit in order to improve supply (productive asset or something of that sort). The problem only appears when the ROI is lower than what is spent (as it is now).
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Originally Posted by Neki Ecko
First of all, Obama isn't clueless about the economy at least he is tried to fixed the problem, unlike GOP.
I think you dont understand what "stimulus" really means, it supposed to help out the American People so they can spend again and have a job, even bring new businesses around the States.
Sure it is risky, but there is no other way unless you got a better idea. Obama is doing his best to fixed the problem. So have patience with him, besides you sound like one of GOP talking points from FOX anyway.
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The fix that they have proposed is worse than the problem. What does anybody believe will be accomplished by nullifying the losses of the banks? There is nothing to be "saved".
Keynes teaches us that money is to be spent in order to counteract the cyclical nature of business. Spending is done through the saved money from earlier. You cannot get around this. Maybe the true objective is to trigger a monetary reset, but otherwise he has no clue at all what he is doing.
The other thing about Keynes in the first place is that he is saying there is a surplus of government revenue during the good times. The argument to this is that government shouldn't be running the surplus anyway and should return it to the population as savings (not consumption). That'll never happen though so it's pointless to discuss.
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Originally Posted by TinyRedLeaf
Japan's problem was that its government took too long to jump-start its economy after its asset-bubble burst. As a result, the country got trapped in a deflationary cycle, discouraging Japanese from spending. Why should they? If prices are falling year-on-year, you'd become richer just by holding on to your cash, even at near-zero interest rates.
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...And what would have happened if they had spent faster? You can't fix the problem with things like spreads by spending when it is created through the addition of more debt. The market continues to deflate no matter how fast you spend until it hits the equilibrium mark. Once the asset bubble collapses the business model depended upon by some certain major industries collapse completely. The resulting deflation is not something you avoid. Everything must be payed back. Deflation in today's sense is defaulting debt and the more you attempt to lend during a downturn the more defaults you will have.
Expanding: hypothetical case where interest rate is at 0%. This means banks must not suffer any default at all just to break even. The lower you push the rate the lower the allowable number of defaults. But during this period you want people to take on more debt in order to re-inflate. The chain is never broken because government chose to intervene. Whenever they stick their messy little fingers in places it doesn't belong balancing points are completely stripped away.
The recovery was fueled by the carry trade.
tl;dr They're doing the right thing if they want to force a reset.
I think I'm a broken record.
