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Jul17-09, 03:22 PM
maverick_starstrider's Avatar
P: 1,164
I'm not american but canada's taking a similar approach by trying to buy their way out and I'm quite floored by it. In basic macroeconomics isn't the main example of the failure of keynesian government policy (a policy where the gov't tries to heat up or cool down the economy by adjusting its spending level, i.e. hitler building roads and such) was the stagflation of the 70's where we had both massive inflation AND unemployment (which goes against the philip's curve). Now here's the rub. Wasn't stagflation in the 70's CAUSED by increasing oil prices? So our classic example of when government spending will fail to heat up the economy is when the recession/depression if being fueled (so to speak) by rising oil prices? Is that not the exact same bloody situation we're in now?