However, Robert Reich says we’re now in a depression and we’ll need more stimulus…
Capital markets may or may not unfreeze under the combined heat of the Treasury and the Fed, but what happens to Wall Street is becoming less and less relevant to Main Street. Anxious Americans will not borrow even if credit is available to them. And ever fewer Americans are good credit risks anyway.
All this means that the real economy will need a larger stimulus than the $787 billion already enacted. To be sure, only a small fraction of the $787 billion has been turned into new jobs so far. The money is still moving out the door. But today’s bleak jobs report shows that the economy is so far below its productive capacity that much more money will be needed.
This is still not the Great Depression of the 1930s, but it is a Depression. And the only way out is government spending on a very large scale. We should stop worrying about Wall Street. Worry about American workers. Use money to build up Main Street, and the future capacities of our workforce.
Will there be enough political will for more stimulus bills? In my mind, it doesn’t make any sense that we’d keep pouring billions upon billions into Iraq, but not invest in our own infrastructure.
Still, I’ll bet the Blue Dogs will NOT support more money after passing this massive budget. So folks like Reich better start think about other ways to fix this than selling debt or printing money.