The Big T

How to prevent inflation when the Fed prints a trillion dollars.

• NPR reports that "...in the U.K., the ... latest attempt to goose the economy ... calls for the Bank of England to create 75 billion pounds" in new money. And NPR quotes the BBC: "These actions are unprecedented in the Bank's 315-year history but are now considered necessary...." [From NPR's "Planet Money" blog, 11 March 2009]
• Under the headline "Fed Prints a Trillion," on 20 March 2009 Chris Martenson reported: "In a shocking development that I frankly hoped we'd never actually see, the Federal Reserve dropped a bombshell yesterday and announced that it is going to create an extra $1 trillion dollars out of thin air...."
• The Seattle Times reports that the Fed's trillion-dollar decision was unanimous. [Seattle Times, 20 March 2009]

Well, it's happening. And the Internet response to these printing press releases is largely what you'd expect: Inflation, inflation, inflation. I have a different take. 

The $787B Stimulus

A Context for Obama's $787,000,000,000.00 Stimulus Package

In the June 10, 1934 edition of The New York Times there appeared an article by John Maynard Keynes. Keynes wrote in part:

• "For six months at least, and probably a year, the measure of recovery to be achieved will mainly depend on the degree of the direct stimulus to production deliberately applied by the administration."
• "The aggregate emergency expenditure is now declining. If it is going to decline to $200,000,000 [$200 million] monthly, much of the ground already gained will probably be lost. If it were to rise to $400,000,000 [$400 million] monthly, I should be quite confident that a strong business revival would set in by the Autumn."
• "Four hundred million dollars monthly is not much more than 11 per cent of the national income...."

I don't know how Keynes came up with his $400 million figure. But it is easy enough to scale his number up to fit the current national income.

A Continuous Dribble

Here are some bold words originally from 5/25/09; my first blog post.