Stein: Fear-Mongers Keep Us In Recession

(CBS)  Are you up to here with all the grim economic forecasts? Contributor Ben Stein happens to be an economist, among other things, and has the hat to prove it ...

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Okay. Let me put on my weather-beaten economist's hat again and try to explain something important.

As we all know, we are in a recession that is bad and getting worse. So, basic question: How do we get out of it?

Well, look at it this way. The economy grows because of two factors: M, which is the quantity of money in the economy, which is controlled mostly by the Federal Reserve; and V, the velocity of money, or the rate at which it changes hands - or, as one might say, the speed with which it is borrowed, invested and spent.

Mr. Ben Bernanke, head of the Federal Reserve, has been doing a fine job of keeping the supply of money pumped up. Score one for him.

But the velocity of money has slowed dramatically.

People at every level are afraid to spend because they fear conditions will get worse and they're going to need the money in the future just to survive. So they don't spend it.

One of the big contributors to fear is the big goombahs in the society saying how bad things are. When Mr. Obama or his economists tell us how terrible things are and how they're going to get worse, they're shooting fear into the economic bloodstream, and that hurts velocity and kills stocks.

Notice that recently Ben Bernanke said the recession might end this year, and the stock market rocketed up that day.

What we need, as Bill Clinton aptly pointed out recently, is more cheerleading and less fear-mongering. We elected Mr. Obama to be National Spirit Leader, not National Scary Storyteller.

If Mr. Obama and Mr. Geithner, his Treasury Secretary, and Mr. Volcker, his well-respected advisor, and some real superstars like Warren Buffett and Jack Welch all came out and said, "The recession will end within 12 months. We are sure of it," the recession WOULD end within 12 months.

It's all about confidence, and the confidence of the heavy-hitters means a lot.

After all, no one is bombing our cities right now or poisoning our rivers. This whole thing is about confidence. Ninety-two percent of us are still employed. Roughly 90+ percent are not behind on our mortgages. If we had some confidence, we could get this ball rolling again.

Let's roll!

[RJM100]

Sorry it tooks so long for my comment as I have been unemployed for over a year and cannot afford internet service at my house. I wait in line at the library to use the internet. In a very, very long line. You see, I can't spend money that I don't have. But ....I do want to address the statement that Mr. Stein made concerning, "90% of us (whoever us is) are still employed". Actually, of that number of employed people more and more are living at or below the poverty level. Employers no longer offer Medical benefits and keep their employees "on-edge" concerning their future employment. We are no longer a nation of workers but of prisoners of our own system.

You don't have to look to the President to analyze the lack of confidence of todays workforce and unemployed. It's the greed and lack of concern for the average person exuded by todays companies. Those same corporations that have reaped tax cuts and government protection/sanctions over the past eight years. And if Mr. Stein cannot relate to these everyday pains and concerns of the average citizen, well.....as the great Mel Brooks wrote, "it's good to be King". And they don't call us peons for nothing.

[angiecasey]

If people making these comments are the future of America we are in trouble. Obviously you are uneducated about economy and the government. President Bush Bush inherited the lame-brained policies of Bill Clinton and the liberals who forced lending institutions to give home loans to individuals who could not afford them, forcing the housing market to tumble and the recession to happen. Had the liberal imbeciles not done so this country wouldn't be in this mess. You're so envious of others who worked hard to amass the money they have and you want want government to do your work for you that you can't even see what's happening. You want socialism, move to another country and quit turning America into a third world county. And take your affirmative action president with you. Until he actually stops lying and doing something FOR this country he doesn't deserve the respect of being called "President", something you liberals never showed for President Bush. You elected an idiot, live with his idiocy.

[wyzguy11]

Ben, Ben, Ben.........whose the "fear" mongerer?!!

Republicans are making a big deal about President Obama being on Jay Leno!! lmfao!!

At this point in Dubya's first term he was already planning his vacation to Crawford, TX while his chief terrorism head, Richard Clarke, was warning him of the Al-Queda threat. The Bush adm wouldn't give him the "time of day" because he was a Clinton hold-over...........9/11 happened.

Give me a choice..........Sorry GOP.......I'll take a bad economy over a 9/11!!!!

[fuzzywzhe]

So let me get this straight

If we all pretend everything is OK, everything will be OK?

For example, if I pretend I can buy a house for $600,000 in Silicon Valley, and I pretend that my job is secure in this very tough job market, and I pretend I'm very wealthy and buy a bunch of crap I don't need, then everything will be roses, as long as everybody else pretends in the same way.

In my opinion, that's what got us into this mess in the first place. We don't need optimistic people everywhere to make a sound economy, we need pessimistic people everywhere to make one. Then houses become affordable, we have jobs we're actually worried about losing, and we're productive instead of delusional.

[imaadouche]

Another chicken little whaaaaaaay :( the sky is falling..f ing man up
I know your not bright but have you heard of social conciseness
Every body effects everything you and the other lemmings get out of yout funk and i promise you things will turn around for you ..or if you choose you can wait for your retarted president to tell you when to smile.

[caseidl]

Mr. Stein was adamant that we were not heading into a recession and that it was great time to invest in financial markets 18 months ago. He's lost total credibility with me. Thankfully, youtube has a memory even if CBS seems to have forgotten. Visit: http://www.youtube.com/watch?v=jv_kLqxbtcg.

[daisyalso]

Mr. Stien you are an ass. The fear is real because the money does not exist. I have been out of work for over a year. Unlike most of America I pay my credit card bills in full and on time. I have a small line of credit that I struggle to pay off ($270 a month). I owned my own business so I do not get unemployment. There is no money coming in. I live in a rural area and I can't sell my house. If I had money I would spend it. Americans are known for not having savings accounts. How do you think we got in a credit mess in the first place? For decades we have lived beyond our means. The majority of Americans live paycheck to paycheck. There is no money to spend!!! We aren't hording it under our matresses. You are so out of touch! Put your money where your mouth is - buy my house so I can move to a city and find work.

[kfor777]

I love how all Libs hang out here at CBS (Communist Broadcasting System). It's just like them to bash someone for say that we have to be more positive. The Dems like doom & gloom as long as they can blame someone else for it.

[llrree]

re: my earlier comments to Ben

PS: I AM an optimist and it is really, really hard for me to be in this position, but this IS my reality.

[llrree]

Dear Ben,

I've been a fan of yours for many years and I usually enjoy listening to your insight...politics aside, BUT?

Sunday March 8, I was completely annoyed by your piece on Fear-mongers keeping us in Recession .

I think you might be out of touch with the regular people.

While my husband and I have both been employed by the same companies for 28 & 21 years respectively, we are both unsure about our employment future. He is in construction and I work with a training organization. Many or our friends, family, and business associates are losing jobs, or having hours cut, or long term benefits taken away because there is no work on the horizon for them or their companies.

It's a scary time for all of us, and having public figures put a positive or negative spin on the state of the financial world will not change the FACTS?people are unsure and feeling a strong need to be cautious because they don?t know how long their comfortable situation will remain.

I have been planning to replace my well used 1997 Toyota at the beginning of this year as it's now 12 years old, but I'm afraid as most people are to commit to an auto or home equity loan at this time. You see, if one of us loses our job, there?s a real good chance we?ll need that $300 to $400/month for food or mortgage.

Confidence does not make projects or contracts appear that are not there. So the reality for many of us is that we are fearful and will be until companies stop layoffs and slashing hours and salaries. And we are not going to spend, spend, spend if we aren?t sure about our future in the workforce.

And I?m not even going to get into the serious concerns that any one of us could be the next group affected by the GREEDY slime bags who are stealing the working persons hard earned retirement and pension funds and living high, high, high.

[ldsage]

I agree with Mr. Stein that there needs to be some positive economic talk out there since so much of the economy is based on attitudes. But Mr. Stein blames President Obama for not making positive statements. However, each day I hear multiple negative economic stories and statements on PBS, BBC, CBS and local radio. It ranges from 6-12 times a day (I've been counting). That much negative reinforcement is surely not going to help. The last I heard from Obama was during the joint session of congress. His statements were much more positive than what we all hear on a daily basis.