Salon rounded up a bunch of economics eggheads and asked them how to fix the economy. All the article really proves is that nobody knows the solution (not a surprise). Some people say that we need to control deficit spending, other people say that we need to blow out the deficit and stimulate the economy through public spending. One of the logical ideas that is proposed is using federal money to prop up the various state and local governments that are really struggling for air right now.
The last person mentions that we need to help people out with consumer debt, and that deflation is currently a much bigger risk than inflation. I tend to agree that a bit of inflation would be helpful right now. It seems that we’re a nation of debtors currently, and inflation is great for people with debt. It hammers the people who have a lot of cash assets, but that’s not our biggest worry right now (in my unlearned opinion). I shudder to think that we may find ourselves in a Japan-like situation where capital is essentially available for free and there’s just nothing to spend it on.