Originally Posted by Parallax
A new low for CNN. Except for the auto bailout which is about $0.09 trillion the rest of the $3.9 trillion stealth stimulus in the graphic is monetary stimulus and not fiscal. And again not every fiscal stimulus is spending either ...
Thanks for bearing with me. So you don't agree with the CNN characterization. A couple of questions: Why would financial industry bailouts be considered monetary stimulus? same with the other two...housing and credit.
Here's what I found about monetary stimulus:
it involves the manipulation of the available money supply
1) Alter the reserve Ratio: Reserve ratio is the percentage of assets that commercial banks have to keep on deposit with a Central Bank (Fed in US, RBI in India). Lower the Reserve ratio, more money the institutions can flow out in market
2) Lowering Discount Rates: These are the rates at which financial institutions loan money from Central Banks (Fed in US). Lowering discount rates will encourage borrowing and more flow of money in market