When I read these two articles, I was reminded of the Seinfeld episode where George realized that he has been making bad choices all his life – so he should do the opposite of what he thinks is right.

Case in point:  This article discussing how the budget deficit is now increasing due to stimulus points how how the government has been making bad choices.

The uptick, which had been projected last winter by government analysts, largely reflected the revenue loss from expiring tax breaks for businesses and individuals that Congress extended in December.

Wait a minute..  I thought lower taxes were supposed to trickle down and result in increased tax receipts – how could that happen?  And all you Keynesian government economists out there – what are you thinking?  We are supposed to stimulate the economy with deficit spending during downturns, and recapture that excessive spending during the good times.  Are these not good times?  How low to employment rates need to go before we are in good times?  If not now,  when?

Just like George – I think they need to rethink their choices.

Now lets move onto the Fed.  Now, the thinking is,  maybe low rates are hurting the economy!

In the minutes for the central bank’s Federal Open Markets Committee September meeting, several higher-ups at the Fed hinted that the policy of historically low interest rates was doing more harm than good to the economy.

After several years of keeping rates at or near zero to grow the economy – they now wonder if low rates are stifling growth?  Perhaps their models did not take into account the huge demographic of baby boomers who are trying to save for retirement are getting no interest income, causing them to try to save more and not stimulate the economy.  Well, at least now they are thinking about it.

I think the next step is to take a page out of the Costanza playbook.

 

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