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This isn’t rocket science. Keynes suggested stuffing bills into bottles and burying them down mineshafts; Milton Friedman once proposed tossing cash out of heli

This isn’t rocket science. Keynes suggested stuffing bills into bottles and burying them down mineshafts; Milton Friedman once proposed tossing cash out of helicopters. But as long as the government is spending money, we might as well spend it on something useful. And thus, fiscal stimulus. I agree with printing money to halt the deflation. But this should not be done through government projects. If the money is spent via government projects, then you still get massive frictional unemployment as businesses shut down and and everyone has to find new jobs working for the government. Second, government spending has a ratchet effect. Government programs never die. Finally, I believe individuals know how to spend their money the best. Should money be spent on a high speed train from Boston to Washington, or should it be spent on healthcare? Just print money and give it to individuals and let each person decide.

swombat 18y ago
As I recall, an article I read recently outlined a few key principles for such a monetary deployment (which Lawrence Summers apparently supported until he became part of the administration): 1) Must be able to start very soon 2) Must have a clear horizon (i.e. a project with a final deadline, so that it doesn't keep costing money forever) 3) Must be useful One example it gave of the best way to spend that money would be actually to repair existing roads. That's usually very easy to do right away, provides immediate short term benefits, and reduces your long term costs (unlike building roads, which increases them, as you then have to maintain all these new roads).
- bokonist 18y ago
  The point of monetary deployment should be balance sheet repair. Only when people's balance sheet's are repaired can normal spending resume and the layoffs stop. The point of an intervention now should not be to get the unemployment rate back down to 4%, but to prevent it from going to 15%. Therefore, the thing to do is to repair balance sheets by printing money. If you only give money to people repairing roads then consumer spending still drops off a cliff, and millions of people still lose their jobs.

swombat 18y ago

As I recall, an article I read recently outlined a few key principles for such a monetary deployment (which Lawrence Summers apparently supported until he became part of the administration): 1) Must be able to start very soon 2) Must have a clear horizon (i.e. a project with a final deadline, so that it doesn't keep costing money forever) 3) Must be useful One example it gave of the best way to spend that money would be actually to repair existing roads. That's usually very easy to do right away, provides immediate short term benefits, and reduces your long term costs (unlike building roads, which increases them, as you then have to maintain all these new roads).

bokonist 18y ago
The point of monetary deployment should be balance sheet repair. Only when people's balance sheet's are repaired can normal spending resume and the layoffs stop. The point of an intervention now should not be to get the unemployment rate back down to 4%, but to prevent it from going to 15%. Therefore, the thing to do is to repair balance sheets by printing money. If you only give money to people repairing roads then consumer spending still drops off a cliff, and millions of people still lose their jobs.