I guess it's just my luck that most of the dear visitors who comment upon comments I make here are from the less-government-the-better school of thought and presume I am a fan of the more-government-the-better approach. However, I prefer to think of myself as belonging to the government-as-tool camp--meaning sometimes you need more government, sometimes you don't. And like most things in life, what you need and when depends on the circumstances.
Right now the circumstances call for massive government action, and yes I know you have heard this before, on a scale not seen since the 1930s and '40s. That's why I for one was thrilled to see in the (online) newspaper this morning that Federal Reserve Chair Ben Bernanke told Congress flat-out that it must act speedily and aggressively to fix the economy and pass the federal budget or our country could face not just a recession but "a prolonged episode of economic stagnation.”
His testimony today came as Congress began considering President Obama’s $3.55 trillion spending plan for fiscal year 2010, which figures on a deficit of $1.8 trillion this year alone.
As reported by Brian Knowlton in the The New York Times, "While the Fed would normally look askance at numbers like that, the testimony on Tuesday seemed intended to give a green light, as part of a no-holds-barred economic recovery program."
Some good old days: 1950-2004.
Here is an interesting tidbit for all those who fear deficits more than any of us should: The Fed Chief's testimony projected that failure by Congress to enact the requisite spending might result in an increase in public debt to the equivalent of 60% of economic output-- compared with 40% before this economic crisis began! That higher mountain of debt would be in line with the debt accrued by the astronomical borrowing needed to prosecute (successfully, I might add) World War II.
I don't think Bernanke mentioned it today, but that huge post-war debt was paid down amid America's greatest economic expansion.
