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Personally, I think Obama is generally doing the right thing. And, he’s doing exactly what Bush started doing once the crisis hit.
IOW, it is not complete idiocy to spend AND cut taxes (fiscal policy), AND inject liquidity into the system (monetary policy). There is a real threat that putting on the brakes – raising taxes, cutting spending, tightening money -- will send the economy into a deflationary tailspin where the best case is we end up with a Japan style deflation and the worse case that we witness a global deflation / depression (when the US sneezes, the world catches a cold).
I know there are a few people who advocate both slashing spending and having the FED stop what they are doing (ie; quantitative easing), and there is certainly global pressure to reign in the spending, protect the dollar, etc.
In the first case I think that these advocates don’t believe the threat I described is real (or more likely don't understand it), and in the second case these people have conflicting goals.
It will be interesting to see what happens in 2011 and 2012 as pressure is building within the US to reverse these policies. Right now, these people reside outside mainstream economic thought, although they make a lot of noise.
Either way, it’s going to be a difficult road ahead of us.
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