A very simple economic plan

A very simple plan:

Note: I am not an economist or T.V. pundit, etc.  This is my take in my own layman's terms of what the basic problem is and how history has shown how to fix it.

Somehow, through all the bloviating politicians, T.V. pundits, etc, we have forgotten who is really behind the "markets".  It's us, the consumer.  2/3 of the American market is driven by consumer spending.

It's pretty simple psychology.  I feel good, I buy stuff.   I feel bad, I don't.  As such, injecting 700 billion into the ether for liquidity, capital or any other academic term you want to use will not change anything. You might as well have gone to Vegas with it.  (Although, with that much cash I think we could afford Monte Carlo.) You have to do something else.  You have to make the general public at large feel like it's going to be ok. Bloviating about capital injection and other jargon isn't going to get people to go out and buy anything.  More below...

Franklin Roosevelt faced a similar problem coming into office after the affects of the crash had nearly devastated the country.  Unemployment was rampant and there was zero confidence.  By basically rebuilding and building the infrastructure we now ironically have crumbling some 80 years later, he changed the psychology.  With a job, surprise, you can afford to purchase things. With a job, you feel better about yourself and your country.   Our grandparents and great-grandparents generation literally and physically helped re-build this nation together.  This in turn allowed business to grow again, (again because of consumer spending) and eventually turned the economy around.  

Obama has briefly mentioned about the need for a public works project to rebuild our ailing infrastructure, but I propose something larger.  Take those billions we are about to waste and do something brilliant with it.  Let's finally break free from oil and build the next generation of autos that GM and the other companies have ready to go with plug-hybrid and plug vehicles running on lithium-ion batteries.  Let's also rebuild the country that has been slowing falling apart during the last several decades.   This is a much better use of money and will actually turn around the country.  Otherwise,  no matter how much money you hand over to banks and other institutions, if the consumers psychology is not repaired they aren't going to be buying anything, especially Wall Street and Washington b.s.

Tags: economic, FDR, obama, PLAN, stock market, Wall Street (all tags)

Comments

5 Comments

Consumerism needs to be somewhere south of 50%

works programs are great, but don't lead people to believe that they will get something for their labor. They won't.

Consumption needs to contract by 30-40% of its current total.

by Paul Goodman 2008-10-10 10:46AM | 0 recs
Re: Consumerism needs to be somewhere south of 50%

Hi paul,

Wouldn't consumption contract naturally anyway with the decline?  Talking to our grandparents they cut way back during the depression and as many of us know how "cheap" they still are as they recall those bad days and spent their whole life being frugal even years after the depression and WPA projects.  Thoughts?

by dem4life 2008-10-10 11:23AM | 0 recs
Re: A very simple economic plan

Hi paul,

Wouldn't consumption contract naturally anyway with the decline?  Talking to our grandparents they cut way back during the depression and as many of us know how "cheap" they still are as they recall those bad days and spent their whole life being frugal even years after the depression and WPA projects.  Thoughts?

by dem4life 2008-10-10 11:23AM | 0 recs
Re: A very simple economic plan

I agree completely. It's time to spend, spend, spend, to create jobs, create wealth, and invest in the future of our country.

Looks like Joe Conason on Salon.com agrees too:
http://www.salon.com/opinion/conason/200 8/10/10/crisis/index.html?source=rss& ;aim=/opinion/conason

by LakersFan 2008-10-10 12:09PM | 0 recs
Re: A very simple economic plan

Good find on the Conason article. Good to see others thinking the same prudent way.  Hopefully others out there with even more clout may be able to bend/dent the ears of those making decisions.  My guess is no, we'll likely have to wait until after the election.  Thankfully some of those "former" rigid free marketers are finally waking up to the fact that effective government, can surprise, be useful. Hopefully Obama and the others in Washington finally wake up that only through investment in people and projects can this end.  Our market only works when people are comfy engouh to actually buy things and investors won't invest unless that starts happening.  Again, throwing money against the crumbling walls of our current financial setup is useless at this point and only will make things worse.

by dem4life 2008-10-10 02:02PM | 0 recs

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