Whose Recovery Is It?

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On Friday, the jobless rate dropped to 9.4 percent from 9.5 percent and the media celebrated the coming 'good times' thanks to the policies of Congress and the White House.  Wow!  Well, Investor's Business Daily has a slightly different take.

An article in Fridays IBDeditorials points out:

"The plain fact is, a recovery was baked in the cake as 2009 began. The main reason was the Fed went pedal to the metal on money creation in December, slashing its benchmark fed funds rate to zero.

Since then, the monetary base -- the most basic money supply controlled by the Fed -- has grown at an average yearly rate of nearly 100%. That's the biggest sustained rise since the Fed began in 1913.

More to the point, the stock market has had a fairly sustained rally since bottoming on March 9. Since then, share prices have added more than $3.6 trillion to shareholder wealth, a chunk of which will likely be spent in coming months."

The politicians will, of course, take credit for the improved economy, but unfortunately the amount of debt created in the process of 'stimulating' the economy will eventually slow it down considerably.  The federal stimulus has amounted to approximately $12 per person.  Somehow, I don't think that would be enough to reverse the direction of the economy.

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This page contains a single entry by Granny G published on August 10, 2009 4:45 PM.

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