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Do you think government spending will stimulate the economy or make things worse?

Robert Wiedemer

Aftershock Book

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Video Transcript

One of the things that's changed in the last 10 or 15 years is the deficit itself. It used to have a much stronger impact on boosting the economy than it does now. That's actually a sign of how slow the fundamental economy is. A one and a half trillion dollar deficit, that's massive. Even during the early 80's when we started running deficits, we'd maybe run a 200 billion dollar deficit. During the worst of the Iraq war years and the Bush years, maybe run 250-350 billion dollars. One and a half trillion, that's enormous. That's a big boost to the economy, but look at our economy, almost 10% unemployment. The medicine isn't working very well and that's part of the problem. That's part of the reason we have to start printing money, as well as, borrow money.

When you start adding all these things up, you're starting to get an overload of medicine, as if you just started taking too many pills, and too many drugs, it all starts interacting and it's just going to make the patient sick. For awhile, you get a high out of it, but eventually you're starting to do too much, it's not having the impact, and it's going to have to be more and more, and when it is more, that's where you're going to get big inflation. That's where you're going to get big fears. That's why at a certain point it all sort of hits the wall relatively rapidly and starts to melt down. Kind of like when the 2008 crisis hit and the mortgage bond market melted down, almost overnight.

Related quote from his book:

"...the dramatic intervention only served to temporarily blunt (not stop) the effects of the underlying fundamental trend, which is why the falling housing, private debt, and stock market bubbles are still on their way down." (AFTERSHOCK, page 23)