kblair7

Bush has very little control over MONETARY POLICY & GROWTH POLICY,he can influence fiscal policy (i.e. Taxation/expenses etc). These two variables are outside the control of party politics in the sense that democrats and republicans do not set ST/LT interest rates, they do not have the ability to directly manage or stimulate capitol (they can't print money).

Depending on what school of economics you choose to adhere too, Kenyes said that in times of depression people tend to want to save more, this is usually a good thing but when EVERYONE starts hording money under their mattress (going back to an example I used) it can have adverse effects, the lower the consumption demand, it adversely effects aggregate demand, (more in the short term I think). Which in turn will cause unemployment, since the decline of aggregate demand will cause national output (Real GDP) and income to fall, thusly unemployment will increase. The fed KNOWS THIS, and they are attempting to counter such behavior by cutting checks for people. Its a small amount but its enough to get people to spend and not get entirely too thrifty. Greenspan and Bernake play a dangerous game here, even Friedman would shake his head at this foolishness. Such microeconomic activism will never, and has never worked.