January 16, 2008
By PETER NAVARRO
Unfortunately, the importance of
Consider the Federal Reserve. Its recession "solution" is to feverishly cut interest rates and throw open wide the credit spigot. With the dollar hitting fresh lows, this easy money policy has merely debased our currency.
Because monetary policy isn't working, economists on both sides of the party aisle are urging the use of fiscal policy to stimulate the economy. For example, both Larry Summers, a Democrat and former Treasury secretary, and Martin Feldstein, a Republican and former chairman of the Council of Economic Advisers, want an emergency tax cut. This, however, would exacerbate an already chronic federal budget deficit, further devalue the dollar, and likely ignite a simmering inflation.
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