photo by cl-s
Today there was an article from Ben Stein, the teacher from “Ferris Bueller’s Day Off”, regarding what he sees as a chance to “Reflate the Economy-Now“. There is an excerpt from the article that rang true with me:
“Obviously, this is also a time for extreme monetary growth. As we economists would say, the velocity of money — that is, how often it changes hands — is falling rapidly. This means the Federal Reserve can pump up the quantity of money greatly to offset that fall without fear of inflation. There are the usual “pushing on a string” limits to how well this will work but it must be attempted.”
Why is this important to you?
- When money is not changing hands it means there is no commerce. No commerce means no jobs, which leads to no money, which leads to no taxes, which leads to no paved roads.
- If you are an investor it helps you gauge how big the economy is. It is usually measured as a ratio of Gross National Product (GNP) to a country’s total supply of money.
In my opinion, if auto industry does not get bailed out, and today it looks less and less likely (Watch here!); we could be in for a serious economic “sink”. Like the Dow Jones in the 6,000’s bad. Truly at this time, all hands need to be on deck. What do you see as the answer to turn the economy around? What else can be done that has not been done?
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