Did you read Barnanke's Helicopter speech Doug posted? He basically says the Fed can force feed money into the financial system through a variety of ways and stop the economy from falling into `deflation' aka a Depression.
I agree with you, I don't see how that will work. Part of the reason, though, is because it is based on the assumption that the private financial sector will Do The Right Thing, just based on cash incentives. Expecting them to do right is foolish.
The government in a cordinated system of agencies, needs to literally take control over the private financial system and run it. And I don't mean buy it, I mean take it.
What you are saying though is, essentially you don't think even that would work?
I think I agree, because there is no value or wealth created, for the simple reason that everybody forgets. Money is not wealth. It represents wealth. The concrete wealth and or poverty of a society is spread out through the totality of the skills, knowledge, and productive abilities of the people of that society.
Well, mistaken in theory or not, that's why I think any `stimulus' package has to start at the bottom, with the people. Not just for ideological reasons, but for realistic and practical reasons. That's why I want to see those billions turned into public infrastructure. I can think of transportation systems that would really create a lot of jobs in a hurry: rail and shipping. What suggested the latter was Romer's comment on Japan. Japan was engaged in a massive ship building industry, as part of their master plan to control the Pacific.
I think the biggest industry in SFBay area was ship building. I've been to edges of some of what's left of these areas. They are fucking enormous and must have employed thousand and thousands of workers from the lower trades all the way up to the engineering and planning staffs.
Anyway, more dreams...
CG