[quote=FlyerInHi]
Beyond the polemics, immediate reparations to blacks would be great economic stimulus, haha[/quote]
That would depend on where you get the money from. Everything is a balance sheet so in order to give reparations you’d have to take that money from some other group. The question becomes is that other group investing in something more productive or less productive.
Here’s an example. Suppose you would get the money to pay the reparations via removing tax credits for Electric Vehicles. So Tesla would be forced to invest less in production of Tesla cars and fewer manufacturing jobs would be created at Tesla. Suppose then that the people that receive the money go out and buy cheap junk made in China at Walmart. Is that a net economic stimulus for the economy here in the United States. I can make a reasonable argument that that would be a negative for economic progress in the US and a net benefit to China. Is that what we want?
That’s been the problem all along for Bernanke’s stimulus efforts. He can make it cheap to borrow but he can’t make people do productive things with the borrowed money. Almost everybody here would probably borrow $500K at 2% interest if they could but how many would actually do something with the money that produced jobs or economic activity. Most would probably try to grow it in the stock market or buy and rent real estate. How many would put in the hard work to start up a new company and create jobs. At the same time if it cost 10% interest to borrow $500K then people that did choose to borrow would likely be forced to do something innovative and productive with the money. There would be no other way to earn a return otherwise.
When interest rates get really low people borrow to do easy things like speculate in asset prices. Of course that leads to bubbles which eventually blow up.
