As Hurricane Sandy struck, Governor Chris Christy understood immediately what was needed: cash and lots of it.
Safety, potable water, food, communications gear, gas and shelter would all be needed, not just for a day or two, but for weeks, possibly months. To ensure a steady supply of those necessities, BIG BUCKS were called for.
Christie, along with the help of President Obama (a Republican and a Democrat working together, hard to believe), was able to get money flowing quickly.
In times of crisis, goodwill is a necessity, but money soon needs to follow to get the most basic needs and support that goodwill and avoid an economic death spiral – A.K.A. Katrina.
Thinking of the economy as a bucket of water may be the best way to grasp how money and the economy work.
Growth comes from excess water flowing over the edge of that bucket and into our hands so we can save, invest and spend. If that bucket becomes half full, it needs to be refilled quickly. That bucket is not going to magically refill itself. Wait on a rainy day? Too risky.
The Great Depression is the example of not refilling the bucket. Herbert Hoover chose high tariffs and live within your means. Hoover took water out of the bucket. He didn’t refill it.
Turn to 2008 and the Great Recession. The US government learned from past mistakes and added massive amounts of water to the bucket. The 2009 budget was USD 1.4 trillion in deficit. A BIG number. That money flowed into the economy.
The move quickly refilled the bucket and avoided a Great Depression. The economy collapsed some 30% in the Great Depression. In the Great Recession, it collapsed about 9% in late 2008. Quite a difference.
The budget deficit is now below USD 600m, heading down, the economy is growing (albeit too slowly in Bergen County) and job growth is finally kicking into gear.
The difference between the 1930s and a few years ago? Congress moved to refill the bucket. What was Congressman Garrett’s response? Like Hoover’s: live within your means. While noble, it is a pure fantasy approach. Belt tighening doesn’t work in times of stress. People need help and they need it fast.
It’s time to send a representative for the 5th District to Washington that understands creative solutions are needed for tough problems. Scott Garrett has proven he is not that person. Maybe Roy Cho can be that person.
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