Saturday, August 14, 2010

Good news - - no more government stimulus action!

Typically, the Fed can lower interest rates to encourage Americans to borrow money and spend it, invigorating the economy. But the benchmark interest rate controlled by the Fed has been almost zero for more than a year. . . . Congress has the power to regulate the economy by adjusting tax rates and passing stimulus programs - - the side of the equation known as fiscal policy, as opposed to the Fed's monetary policy. But there is little interest on Capitol Hill to undertake a major new stimulus effort. The midterm elections are less than three months away, and Republicans and Democrats alike fear voters are worried about the federal budget's $1.4 trillion deficit.

With paralyzed government getting out of the way, the economy will eventually experience real growth, thanks to the efforts of everyday Americans and businesses (as long as no one in government monkeys around with tax and interest rates or further increases the deficit).

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