Tuesday, July 7, 2009

Obama Advisor Says Stimulus Too Small, Wants More

Laura Tyson, a UC Berkeley economics professor and a member of President Obama’s Economic Recovery Advisory Board, said in Singapore today that the $787-billion plan Congress passed in February "will have a positive effect, but the real economy is a sicker patient."

The plan turned out to be "a bit too small," she said. And, according to Bloomberg, Tyson said that the U.S. should consider drafting a second stimulus package focusing on infrastructure projects.

She then added, "The money is just really starting to come out in more significant amounts now. The stimulus is performing close to expectations but not in timing." --which is pretty close to a contradiction of her other statements, although she could probably defend it by saying it is now meeting expectations, but I screwed up on my initial forecast, and we need even more now.

Clearly, Tyson doesn't watch money supply, has no understanding of business cycle theory and simply spouts out mainstream, Keynesian policy prescriptions that completely ignore both the crowding out of business borrowing when the government increases spending, and ignores the ultimate inflationary result of Fed money printing ,to keep interest rates under control during a period of heavy Treasury borrowing.

Her policy prescription, if followed, would mean a lower standard of living, more distortions in the economy, higher interest rates and an even greater percentage of the economy falling under the control of the American oligarchs.

1 comment:

  1. Wenzel,

    Yeah, all those things may be true, but Tyson gets to travel to Singapore to mouth off about stuff like this so... life is good as far as she's concerned!

    Seriously, what are members of the "dismal science" doing traveling to Singapore in the middle of a recession?

    Interventionism is a cash cow.