Money Ball

Looking out at a world economic collapse, we have questions.

Question: What is the difference between fiscal and monetary policy?

Answer: Fiscal = budgetary choices of taxing and spending

Monetary = federal reserve decisions on interest rates and monetary supply.

The massive stimulus bill backed by President Barack Obama and congressional Democrats is fiscal policy. The Senate version of the bill, which topped out at nearly $900 billion, is headed to the floor for debate. The House bill totaled about $819 billion and earned no Republican votes, even though it easily passed the Democratic-controlled House. At some point lawmakers will need to compromise on the competing versions.

New monetary policy may also eventually be included if the government buys up the "toxic assets" that have clogged bank balance sheets, locking up the institutions' money and preventing them from issuing new loans.

www.google.com/hostednews/ap/article/ALeqM5gFAnWqnVfr3sy_ENl-7xIPRZ0s6gD963NB4G0

Question: What do the Stimulus Plans look like World Wide?

Answer: This is a great interactive site that allows you to click on a nation and see what they have to done so far to try and save their economy.

Question: Will this plan, which got through the House with zero Republican votes pass? Obama wants it signed by President's Day.

Answer: Unsure. GOP Senate leaders vowed to defeat (filibuster) the bill if it's not stripped of unnecessary spending and focused more on housing issues and tax cut. Obama said he is confident the final version of the bill will have wide, even bi-partisan support.

www.google.com/hostednews/ap/article/ALeqM5gdDrWnoMueqVFI-Uo1ClxVZur22AD96363080

The CBS 2 School Guys have their take, projecting that the President with his Championship Bully Pulpit, will be able to Quarterback, as Chief Legislator, to victory.

VIDEO: Super Monday

Question: While our government is getting more transparent, by placing the proposed legislation on-line, the House American Recovery and Reinvestment Act of 2009 is 647-pages! Could anyone read all of it? That includes members of the House of Represenatives.

Answer: Probably, and hopefully. Seriously!? Surely not all the members got through all of this stuff, nor could we:

The Plain English Campaign would have a field day with such gobbledygook language. The Plain English Campaign has been fighting for crystal-clear communication since 1979. Be suspicious, they say, of those who cannot speak and act cogently.

Here is an example of a recently posted airline policy that earned a Golden Bull award from the Plain English Campaign:

“To the extent that any provision contained or referred to herein is contrary to anything contained in the Convention where applicable and in any applicable laws, government regulations, orders or requirements that cannot be waived by agreement of the parties, such provision shall not apply. The invalidity of any provision shall not affect the validity of any other provision.”

Now compare it to a paragraph found inside H.R. 1, the bill whose purpose is to restore our confidence in government:

“Of the amount appropriated to carry out this section, and not reserved under paragraph (1), each State shall be allocated an amount in proportion to the amount received by all local educational agencies in the State under part A of title I of the Elementary and Secondary Education Act of 1965 for fiscal year 2008 relative to the total amount received by all local educational agencies in every State under such part for such fiscal year.”

Question: Is there any other way? I thought Obama was bringing change. The revealing Official Title of the House Bill actually reads as follows:

“Making supplemental appropriations for job preservation and creation, infrastructure investment, energy efficiency and science, assistance to the unemployed, and State and local fiscal stabilization, for the fiscal year ending September 30, 2009, and for other purposes.”

Larry Summers, one of Obama’s star economic players, called for a stimulus package that was timely, targeted and temporary. The title reveals a lot more. It reads like a Democratic Party wish list. The title is scattered, sluggish and settled.

Answer: Maybe. But not easily. Though it seems like this idea is simple and to the point:

A proposed requirement that any bill be read in its entirety on the House floor before representatives are asked to vote on it. A group DownsizeDC.org that claims close to 25,000 members is calling for the "Read the Bills Act." "Most Congressmen are lawyers, and many others are businessmen. They know what “fiduciary responsibility” is. For Members of Congress, fiduciary responsibility means reading each word of every bill before they vote."

Question: Will this work? What do (or would) Keynes, Friedman, and You, say?

Answer: Read these blurbs and be prepared to defend your economic positions:

John Maynard Keynes. Regardless of what other economists say, Keynes' brand of interventionist fiscal and monetary policy have trumped times like these since the Great Depression. The influential writings of Keynes, the British liberal who died back in 1946, still hold court in both Democrat and Republican circles in America and have been foundation of the British Welfare State. Central to his economic theory was the importance of deficit spending. The government is to play an important role in "priming the pump" of the national economy. Laissez - faire is out, active intervention is in. This is now economic dogma here in America. Not quite that far out in the UK.

Milton Friedman. Friedman’s view was that inflation, at the time a serious problem in many countries, was caused by governments pumping too much money into the economy.

At the same time Friedman was convinced that private individuals and companies should be given as much freedom as possible to carry out economic activities. Friedman became the most outspoken economist of his time, promoting small governments, low taxes, free markets and privatisation.

He attacked even the dominant theory of the time, developed by the British liberal thinker John Maynard Keynes among others, who espoused capitalism with a softer, more human face.Friedman promoted capitalism in its basic and less human forms, centring on a fundamental belief in the working of markets and privatisation: market fundamentalism.

In 1976 Friedman was awarded the Nobel Prize for Economics, which gave him the status to impress not only generals like Pinochet, but others including British prime minister Margaret Thatcher (1979-90) and US president Ronald Reagan (1981-89).