It has been proven over time that ‘fiscal policy’ in forms of kick starting and revving up the economy during non parametric, abnormal times:  stimulus works. Obviously, cranking into the economy speeds up “recovery”, minimizes unemployment and stops asset prices from overshooting on the downside.  For instance, regardless of differing arguments on the effectiveness of such inputs in the 1930’s, the resounding effect was that it did work. 

On the other hand though, there are many who would argue that government’s intervention in stimulating the economy via spending and investment, for instance to create and boost the job markets, is wrong.  Of course this is madness at its best!  Perhaps, these ideological, half baked, miscalculated theorists are not aware of the “real” economy.  Perhaps, though, it is preferable to embark on the road of slashing left, right and center at such a time!  And why not, let us also embark on such a path to recovery with its proper ingredients of massive continuous unemployment, retrenchment and mad liquidation.  Obviously, they are hopeless and are simply wrong. 

On the contrary, there are multiple ways that clearly shows that ‘stimulus’ works and continue to work.  Without a mega fiscal expansion to bolt start the economy out of its state of insomnia, the pains of the contraction could have dragged on and been worse and embarked into another sharp plunge.  Thus the second round of stimulus to the “real” economy such as ‘jobs’ and assistance to small businesses is more than justifiable and simple common sense.  Pretty soon, these measures in itself expand and increase bank lending, consumers spending, housing prices rising, unemployment easing, and the credit market reshapes itself. 

Thus rather than groaning and moaning about slashing and cutting investment and spending:  this is simply not the time.  This in no way of course implies fiscal irresponsibility; but rather “realistic” about when medicine should be applied rather than curtailed when the patient is still in need.  To do otherwise is stupid economics, ignorance, poor economics and poor morals:  ignoring the large numbers of unemployed and businesses still clambering back to their feet.  Nobel laureates Joe Stieglitz and Paul Krugman are probably most accurate in their analysis in the ‘know how’ and pure common sense in steering the ship. 

But again, perhaps according to the ‘gloomsters’, the end is nigh!  Where in fact was the end, where was the great depression, where was the ultimate shipwreck?  Enter stimulus.  But according to the self proclaimed prophets and demagogues: the end was nigh!  Perhaps a message for the prophets:  trimming when the economy should be expanding will lead to a vicious cycle of debt deflation that will push down asset prices, increase defaults, force more layoffs, slow consumer spending, lower earnings and send the economy into a downward spiral, a slump that could be worse than the first. 

Naturally, of course, what the economy needs is a hefty dose of stimulus aimed at “job creation” and strengthening demand. Only the government at this time can provide sufficient resources to ‘spark up’ and ‘rev up’ economic activity and put people back to work.  The result is an accelerating process and the driving force in all sectors of the economy:  agro business, commodity production and manufacturing activity built on its architecture of churning up supply and demand.