Reply #11: I'm not even sure the recession can be contained anymore. [View All]

[Selatius]

The Federal Reserve is at the point where they're going to put in place a 0% interest rate. What are they going to do afterward? Impose negative interest rates?

And the federal government is woefully in the red as far as deficit spending goes already. More deficit spending, even if it is aimed in New Deal-like programs, could push the market for US Treasury bonds into saturation point (Does anybody know where the saturation point is?) before the economy swings up. At that point, further deficit spending will simply provoke Weimar Republic-style inflation and then undo any progress made kick-starting the economy.

When FDR inherited Hoover's problems, Hoover didn't leave FDR epic deficits. He still had a lot of room left to accommodate deficit spending for the New Deal programs. Obama is on different ground here.

In general, I'm speaking as a person who believes the best remedy for depressions is massive spending the likes of which was seen with the New Deal, but spending has its limits, but you want to do it without annihilating your own currency in the process.