Tuesday, April 28, 2009

the stimulus gloves are off


In a recent issue of Grant's Interest Rate Observer, Jim Grant charted the stimulus money (both monetary policy and government spending) as a percentage of gross domestic product for this downturn, compared with the previous 13 recessions.

In those earlier recessions, if you added all the percentages, the cumulative monetary stimuli constituted about 6 percentage points, while thus far in this recession, the stimuli have clocked in at 18%. Add in the 11.9% (of GDP) supplied by the government and you get 29.9% for the combined stimuli. That's compared with a total of 39.3 percentage points for the prior 13 recessions combined.

It's also already 4 times the New Deal's percentage of GDP!

Yes, I'd say the gloves are off. By the time the dust settles, you may not recognize the economic landscape.


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