Here are some thoughts that occurred to me.  Can you economic experts out there tell me what is wrong with this thinking?

The Fed has been using Quanitative Easing monetary policy of pumping liquidity into the market place by buying bonds and keeping interest rates low.  This has had no affect on getting the economy moving again.  It only seems to be propping up stock prices until very few stocks are good values.

This behavior coincides with Keynesian economic theory, which explains that when demand for goods falls off, no amount of liquidity in the economy can get investors to want to invest money in making more goods for which there is no demand.

In this situation, they liken monetary easing like trying to push on a string.  So imagine the Fed is like a fisher rolling line of the fishing reel and having it just pile up on the beach.   When a fish strikes, that person is going to have to reel in like crazy to get rid of the slack before any pull can be exerted on the fish at the end of the line.

So what would happen if the fisher started to wind back the useless slack that is lying on the beach?  In the case of the Fed, would this merely take excess liquidity out of places like the stock market, and make it easier for the Fed to exert control, when and if the economy recovers?

McClatchy DC has the story Obama wants ‘global teams’ to create more foreign investment for U.S.

Obama said he plans to expand his SelectUSA program, the first federal effort aimed at coordinating government efforts to get more foreign companies to spend money in the U.S.

“I’m here because I want your companies to know — I want companies around the world to know — that I believe there is no better place in the world to do business than the United States of America,” Obama said.

If companies around the world wanted American goods, then they would already be buying them.  My guess is that China holds $1.3 Trillion in U.S. Treasuries because we won’t let them use that money to buy U.S. companies.  Can you imagine the uproar from the Tea Party if suddenly China were buying U.S. companies?

There isn’t enough wealth and resources in the rest of the world to replace the consumer demand that has been lost in this country.  That can only be replaced either by US government spending on investment in things this country needs or by fixing the mal-distribution of wealth into the hands of the few, or more probably both tactics.

People say that massive government spending will drive this country to the poor house, while also observing that massive government spending in China is making them rich.  Can anyone explain to me how this can be?