Can it work like Roosevelts New Deal?
By David R. Francis, for CSMonitor (AXcess News) – There’s an old saying by economists that once the Federal Reserve gets short-term interest rates down to zero, it can’t “push on a string.” In other words, the nation’s central bank can’t do much more to revive the economy from its present financial and economic slump because it can’t lower interest rates further. They are now almost zero. Paul Kasriel, an economist with the Northern Trust Co., in Chicago, has a different string theory. He figures the Fed has been, in effect, printing so much money, regardless of interest rates, that in combination with a massive fiscal stimulus package, the economy should revive by late this year or in 2010. “It depends on how fast the government can shovel out the [stimulus] money,” says Mr. Kasriel. During the Great Depression, it was similarly a combination of major government spending (the New Deal) and easier money that eventually brought a vigorous recovery. So today, the Fed must in reality fin
