Quote:
Originally Posted by Gozer
I'm no pro, but I think the general idea is to have loose purse strings to turn things around and when things are going poorly and tight strings when things are going well so that you have that money when you actually need it.
The fact that "we" spent like drunken sailors when things were going well doesn't change the underlying economic principle.
Obama's idealogy, if I understand it correctly says that cutting spending now would exponentially increase the problem. 1930's depression being the best example of that, and Japan in the 90s kept turning off the taps too early.
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That is basically the case, but in the 30's the issue was the banks weren't lending to anyone. That cripples business. Businesses need to borrow money to complete capital projects, and need access to credit facilities to be able to buy inventory and things like that. This is the credit freeze that has caused the problems over the past couple of quarters, or longer in some areas.