| Mr Khan said: It seems to me that the economy as a whole is waiting on something, at which point we'll see an explosion of both economic activity as that money is freed up, followed soon after by rapid inflation, but once groups are spending the money again, the inflation will be easier to tame. |
First off... groups spending money makes inflation harder to tame. It's what naturally causes price infaltion.
More money after fewer goods. That's why there hasn't been huge inflation except for food, gas and other needs. No consumer demand.
Secondly, what the economy is waiting for is said consumer demand.
The government keeps stimulating the economy, however it's not doing anything because all that money is being used to pay off bills and save up because know the economy is fucked up.
The savings rate is way up.
Essentially, the economy is waiting for consumer demand, and consumer demand is waiting for the economy.
It's why all these stimulus actions and fed actions have been mostly useless.
There are only two things that will break this cycle... that I can see at least.
1) People saying "this is the economy we're stuck with, it's now or never for that flat screen." This is actually hurt by stimulus spending.
2) Massive Demand created by a big consumer product or two that EVERYBODY needs to have.
As it is, all stimulus spending is going to do is benefit banks and people who own stocks, while regular people are left out in the cold... I mean with the record interest rates set for keeping money, and lending rates so low, banks aren't finding much they like.
