I agree it was a liquidity crisis not a traditional recession. It was caused by government policies which caused lending with low underwriting standards and also at the same time, reduced reserve requirements.
That said the first response was to improve liquidity in the banks themselves with loans to federally regulated firms. Loans that have been repaid in full with interest or backed by stock which is being successfully liquidated in the open market.
The Summers led Keynsian stimulus, which is the point we disagree on was a choice to use the "spending side" of Keynsianism. An equally large deficit could have been created by lowering taxation. The reason it would have been more effective to the average guy is would have been far more granular. The targeted stimulus was intentionaly targeted to unions (transfer payments to states for public employee support) and other preferred groups. Furthermore it was promised to be ONE YEAR and it has been five so far. Bush gave Obama authorization beyond his TARP which Obama used for the GM, Delco, GE and Chrysler bailouts and others. Not federally regulated banks. In the case of GM and Chrysler and others he did the unprecidented move of canceling the bonds but not the union contracts, opposite of bankruptcies, and literally gave the companies to the employee union benefit plans. That was unprecedented.
Now rather than discuss the political layer I prefer to discuss efficacy. The thing that fixes pending recessions and liquidity crisis (run on the bank) is investment leading to confidence in the population things are getting better. Top down government spending does not do that. It's a band-Aid, and an expensive anf inefficient one.
Improving capital investment and private sector growth is the only way to change attitudes and actual perceived and actual opportunity.
Besides the style of one-sided, wrong-sided Keynsian stimulus that was used and is still being used, there is another entire approach which can be summarised as the Mises approach. Mises and Keynes didn't get along well, but Keynes got the support of the political class because he was advocating something they wanted to hear, more government spending and taxing to do it was just fine.
The Mises approach is essentially the opposite. More investment through properly underwritten liquidity, less taxation and more money in the pockets of persons and firms. That approach has not even been tried in this "crisis". What happened to "all at once"?
As a final layer, the printing of money and spreading to the population causes currency destruction which is different from price inflation. Currency destruction effects all things denominated in dollars, whether it be assets, incomes, savings, or other things. That's why your pay check doesn't stretch like it used to.
The Fed further has an "inflation target" of 2%. Inflation is bad. Targeting it to 2% year after year is very bad. It drops the value of the currency and labor in simple terms at 2% but compounded, it drops the currency and labor at more than 20% in 10 years. That separate from monetary destruction.
The Fed has stated they fear deflation. The reason is not because deflation is bad. It's good for people. It is bad for governments who have large recurring deficits and unimaginable debt because they would have to repay that debt in full strength dollars. If you both deflate and crash the economy you pay back the debt with highly discounted dollars in terms of purchasing power. That's called monetizing the debt.
The Fed has a stated and legislative policy and mandate of price stability. It absolutely and intentionally does the opposite as evidenced by the frame of reference mentioned in the Constitution, Gold. Since the Federal Reserve was formed in 1913 the value of the dollar has dropped 99%.
Countries who do not follow these policies are far more solvent and are currently hoarding natural resources by buying them with cash. This could become a national security issue as we increasingly hoard unsecured debt and forsake capital assets publicly and commercially. This is a tactical economic issue this government not only doesn't comprehend, but has taken the other side of the trade as compared to China, Russia, and other low debt countries.
It's the other Cold War, and they ARE winning.
See, I brought it back to Russia again. Buy land and businesses in Russia. Excellent investment.
The senate votes in rules on itself and when the Democrats took over the House, Senate, and Presidency in 2008, they installed rules so they could run unencumbered. They passed the stimulus ridden budget with a 1.4T deficit in FY09. No Presidential budget has been passe din the senate since and the votes have been a few votes either way of 97-0 against. That was not influenced by a fillibuster.
Had the Senate passed ANYTHING it would have subjected the placeholder budget to reconciliation with the House. That has not happened since Obama has been president largely due to tactical machinations by the Majority leader Reid and with the approval of the Senate President Biden and the US President Obama, all in the same party. The solution while way too late is simple. Pass any budget at all in the Senate and deal with the issues in reconciliation.
Rocketman