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View Diary: Economic news shows still more uncertainty (94 comments)

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  •  Why we need more deficit spending (4+ / 0-)

    The key is in the story:

    "The underlying story that I seem to be saying over and over is that consumers are not feeling good enough to start spending on things that count, such as durables and houses, because the unemployment level is basically so high," said [Chris G. Christopher Jr., IHS Global Insight’s senior principal United States economist]. "And firms don’t feel the need to hire."

    "These two things are feeding off of each other," he said. "Someone has to make a break for it. Right now the consumer is actually retrenching so businesses are not going to have the urge to rehire. It’s a Catch-22 situation."

    This is why Government spending needs to make up for lack of private sector demand.  If government massively buys goods and services, it will put money in people's pockets, more will be employed, and they will eventually feel more secure and start spending.  That's why the phony deficit hysteria is so pernicious.  We will never come out of this without further stimulus -- and if we don't come out of it, deficits will get even worse, which in turn will lead to more cutting.  A vicious downward circle.

    "[W]e shall see the reign of witches pass over . . . and the people, recovering their true spirit, restore their government to its true principles." Jefferson

    by RenMin on Wed Aug 04, 2010 at 08:12:18 AM PDT

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