Stimulus and Low Interest Rates

In times of economic slowdown, should the Federal Reserve “prop up” the economy with near zero interest rates?

Should the Federal Government perform deficit spending to stimulate the economy whether direct or via tax cuts?

We are already at $1trillion deficits. What should the Trump administration do if we fall into a recession?

We don’t have much in the toolbox to use if there is a meltdown.

It could be pretty bad.

We should borrow more. That’ll help.

That’s only reserved for when Republicans are in power. Democrats are the real fiscal conservatives in this country. /jk

Neither really are fiscally conservative.

I concur.

Deficit already up 25% before coronovirus

With proposed tax cuts and potential recession, Trump may accomplish almost tripling the deficit in his first term

A President has the duty to use the federal reserve and the budget to prop up the economy and make sure he can be re-elected.


A deficit that was declining year over year to this.

Why do people still buy the GOP’s concern about the debt?



On the same day that he said that the Fed should use stimulus.


The excuse will be “Trump had to deal with the coronavirus!”

Which of course is true.

But it doesn’t change the fact they were livid about low interest rates and yuuge deficits (deficits the same as today almost) during the financial crisis

Broken link?


What was the term…

Cognitive Dissonance?

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Remember when bailouts where socialism and bad?

Obama remembers


Except farmers, and oil companies

I’d like a bailout

What can they do? The Fed used up its ammo on the Great Recession dropping the rates to zero and quantitative easing. It is true interest rates rose some afterwords but no where near as close as interest rates before the recession. All they can do is pull the helicopter Ben Bernanke and blanket the banks with money.

Whether it’s a month a year or five years the debt can was kicked down the road we will enter an era at best of Japanese style stagnation with negative interest rates. They have no choice but to lower the rates when spending slows and even when the economy is rocking we are still having to pay an insane amount of interest on the debt.

We might find out the golden years of economic wealth and growth was from 2009-2020.


Not much at this point. Instead of using a healthy economy for contraction, expansionary fiscal policy kept going full steam ahead. Instead of making the smart choice to restore financial buffers for future economic downturns, we lived for the moment. Now there is no room for expansionary policy and virtually no room for interest rate cuts.

Call me chicken little, but if things head south it will make the 2008-2009 recession look like a bump in the road.

You’re kind of in a catch 22 though. If you raise interest rates, then the government’s debt payments go up

No catch 22, just an unpopular move. During times of economic prosperity, increase government revenue (taxes) and/or decrease government spending (cuts). Yes, this typically decreases demand, but would give a buffer for raising interest rates. If you abhor contractionary fiscal policy, at least have the guts to raise interest rates. Or vice versa. Or end up in the mess we might face.