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| Re: Where are all those infrastructure jobs? (469330) | |||
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Re: Where are all those infrastructure jobs? |
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Posted by David Fairthorne on Thu Jul 2 23:56:46 2009, in response to Re: Where are all those infrastructure jobs?, posted by docstox on Thu Jul 2 16:42:15 2009. Well, the Fed dropping the fed fund rate to zero has done more in the short term than any infrastructure spending to prop up this ailing economy.I do agree. Monetary policy is essential to the revival of the economy, and the Federal Reserve can act in the national interest, without having to seek the approval of Congress (with the attendant need to buy votes by pork barrel spending (earmarks)). The Federal Reserve can go beyond zero interest rates by buying more securities in the open market, and they don't even have to be Treasury bills. I think this is what is called "quantitative easing". When the Fed increases the money supply, it doesn't have to pick winners. Fiscal policy also has its place, the essential ingredient being to run a budget deficit. That can be done by reducing taxes (Republican) or by increasing government spending (Democratic) or by some combination of the two. I also think that each state should be allowed to run a budget deficit. As it is, the state of California cannot even meet its own payroll, and is having to issue IOUs. In Canada the provinces can and do issue bonds to allow them to run deficits. |
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