Economic Stimuloids

"Suplement Me" by SMmeaLLuM [cc]

"The biggest problem with steroids is that you can only inject so much before the patient goes into cardiac arrest."

-Anonymous

Many of the smart people on Wall Street continue to call for more stimulus in response to falling investor confidence. Major executives like billionaire Mortimer Zuckerman continue to call for more stimulus. They say the current stimulus package is way too small and that Washington will need to ask the Chinese if they can borrow more money on behalf of the unborn American taxpayer before the end of the year.

The U.S. debt levels as a percentage of GDP has now has not been seen since the 1940's. The main difference between then and now is that the debt holders then were mostly domestic; it was considered patriotic to be a bond-holder of national debt. The trouble is that now the U.S. is relying on foreign creditors to buy up public debt. Should these purchasers decide they don't like something the United States is doing or consider their credit risk too high, they may simply stop buying their debt. This leaves two basic options, (1) print more money (inflate and devalue the currency), and (2) raise taxes, and several other more complex but less effective ones, such as raising interest rates.

The most likely response would include an array of the aforementioned strategies, none of which are desirable.

"It's going to take World War III to get us out of this."

- Don Luskin on the state of the economy