White House Acknowledges Economic Reality?
Well, here’s a surprising admission:
Christina Romer, the chair of President Barack Obama’s Council of Economic Advisers, said the initial jolt of the $787 billion stimulus expanded the economy in the second and third quarters of this year. But she said the remaining spending will simply keep the economy from slipping.
In other words, shoving money into the economy expanded it to fit the new dollars, and that spurt must become a constant flow in order to maintain the size of the economy. Of course, to the extent that the new money was borrowed, it will have to be repaid out of the economy (with interest), and to the extent that the new money was printed, it will deflate in value.
The sooner we let the economy return to an unstimulated state, the less the bill will be when it comes due. The economy should be encouraged, through policy changes, to grow on its own.