South By North Strategies, Ltd.

Dean Baker of the Center for Economic and Policy Research reminds us that the economy is still in terrible shape.

So, we are sitting here with a moribund recovery that promises to leave tens of millions of people unemployed or underemployed for the indefinite future. And the political options at the moment seem to be between Democrats who tell us things are good and Republicans who say the economy stinks, but don’t have a clue on how to make things better.
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Just to be clear, we do now how to make things better, we just lack the political will. Spending money creates jobs. Even Tea Partiers will work for money, in most cases even if the money comes from the government. Unless the private sector somehow will spend less because the government spends more (tell me the loony story, I love fairy tales), then more stimulus will create more jobs.
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More stimulus does not have to create a debt burden for our children. The Fed can buy and hold bonds so that the interest is paid to the Fed and refunded to the Treasury. Japan’s central bank has done this and its interest burden is less than ours even though its debt is more than three times as high compared to the size of its economy. And, its main problem continues to be deflation – inflation is nowhere in sight.