And remember, unemployment (and business being off) make the debt go up -- that's what they call an automatic stabilizer. That has been built in because politicians are too slow to help out (especially Rs).

Economy goes down  ==>  tax collection goes down automatically  ==>

(1) This helps the economy and limits unemployment, but ...

(2) It increases debt.

Then when we get well -- when the economy recovers -- we are supposed to pay for the medicine. Problem is, that after the Reagan and W recessions we didn't. This time we better -- after we get well.

May 21, 2010.  A popular topic at tea parties, but really, can you get any sillier? Three trillion dollars ago, when Bush shifted the deficit into overdrive (a good thing he did), inflation was about 2.5%. Now it's about 1%. Hyperinflation? No just hyperventilating.

You don't need to be an economist to figure this out. Say you manage a local restaurant, and read about the deficit. So you think OMG inflation! I better raise the price of a steak and fries. So you "explain" this to the owner, who says, What have you been smokin'. Business is down from the recession; our competition is having more specials, and you think our customers will pay more because the national debt went up?

No, believe me. Any business that raises prices because of the national debt, died a long time ago. A booming economy lets them raise price. A recession—yes that's what's going on—makes it hard to sell things, so prices get cut. That's why inflation is down.  But, what I can't figure (can you?) is why people stay so mixed up?

to his credit, started trying to get us out. Though, mostly he threw money at bankers.

In the Great Depression, Roosevelt tried deficit spending, but he was too timid. Then he stopped in 1937 and the economy nose-dived. It took the humongous deficits of WWII to pull us out of the Great Depression. Those deficits blasted the economy from depression into overdrive.

Of course after the war, we had to pay off a huge national debt, but during that time, from 1946 to 1980, the economy was mainly quite prosperous. We hit a bad recession when Reagan took office, and his early deficit spending made sense (though he didn't know it). But then he continued to drive up the debt through the boom years that followed. That didn't make any sense.

We are now headed into the worst slump since 1938, and you better hope Obama can fix it because that was not a pretty time. Unfortunately, as in the Great Depression, the extreme conservatives would rather trash the country than have our government succeed. They are much worse than Bush.

The main thing to remember is that, with consumer spending going down, business is going to lay people off—not hire them. You can't blame business for this. It's just a vicious cycle that the economy gets into. And you can't blame consumers for not spending in bad times. The only way out of this, if we don't want to wait 10 years, is for the government to spend, pay unemployment insurance, or give tax breaks to people who will spend (not the rich). Of course there's also the problem of the banks. Obama should stop saving the bankers, and just take over the bad banks. Once they're working they can be sold back to the private sector.