Fed Pledges Top $7.4 Trillion to Ease Frozen Credit

Re:Fed Pledges Top $7.4 Trillion to Ease Frozen Credit by robg on Monday November 24, 2008 @02:41PM (#375267)

Sorry, I'm not sure I buy that explanation. It's what the top-down folks are saying, but plainly, and perhaps naively, I just think of what credit is used for - to buy what you can't with cash. Giving everyone cash would filter up to businesses; mortgage payments to brokerages, savings to banks, investments into the stock market and bonds, and purchases to retailers including automakers. Americans would have to do something with that money and there wouldn't be the huge management/distribution fees that are now going to get collected. In effect, you'd be giving the American people a vote about where the money should go based on their everyday needs. And that huge of a sum wouldn't be as easy to fritter away as a $300 "stimulus" plan. Heck, at $7.4 trillion you could give every man, woman, and child over $20,000 (for argument's sake, ignoring infrastructure which would be a mistake).

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Re:Fed Pledges Top $7.4 Trillion to Ease Frozen Credit by dpapathanasiou on Monday November 24, 2008 @03:05PM (#375308)

"Americans would have to do something with that money"

That was the assumption behind the last stimulus plan, too, but it turns out only 10% to 20% of it was actually spent (http://online.wsj.com/public/resources/documents/WSJ-2008Sti...)

Even if people did spend the $10k you'd like to give them, it wouldn't make a dent in terms of home or auto sales unless there was financing available, too.

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Re:Fed Pledges Top $7.4 Trillion to Ease Frozen Credit by Retric on Tuesday November 25, 2008 @11:58AM (#376512)

"the average family spent around 20 percent of their rebate in the first month after receipt." Which is not to say the rest was saved for the long term.

"Low wealth households households that reported not having at least two months in savings in case of an emergency also raised their spending more than the average household when the rebate arrived."

"Our findings underscore the potency of the economic stimulus payments in stabilizing consumer spending during recessions."

This would suggest a trickle up vs trickle down economy where a stimulus package targeted at poor people would have the greatest impact.

PS: Poor people spend more of their money than rich people film at 11.

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Re:Fed Pledges Top $7.4 Trillion to Ease Frozen Credit by create_account on Wednesday November 26, 2008 @10:59AM (#377707)

Poor people spend more of their money than rich people film at 11

Yeah, duh, but even if you gave poor people $20,000 and they spend it all, how does it do anything about the housing crisis?

Without lending, that $20,000 won't change the market at all.

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Re:Fed Pledges Top $7.4 Trillion to Ease Frozen Credit by robg on Monday November 24, 2008 @03:25PM (#375335)

Fair enough. I also got another answer from someone far more knowledgeable from me: At least in the current plans, the government is getting preferred stock in return for their investment.

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Re:Fed Pledges Top $7.4 Trillion to Ease Frozen Credit by vaksel on Monday November 24, 2008 @04:16PM (#375412)

the last stimulas check was a few hundred bucks, a drop in the bucket for most people.

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