“Poorly provided fiscal stimulus can have worse side effects than the disease that is to be cured. This suggests close attention to three issues:
[Fiscal] stimulus, to be maximally effective, must be clearly and credibly temporary – with no significant adverse impact on the deficit for more than a year or so after implementation. Otherwise it risks being counterproductive by raising the spectre of enlarged future deficits pushing up longer-term interest rates and undermining confidence and longer-term growth prospects.”
Pretty damn good argument against the stimulus, eh?
Ironically,these words were uttered by the head of the President’s Council of Advisors, Lawrence Summers, in a column he penned a year ago.
Now if only they would listen to their own advice.