How do we know when the economy is back on solid ground?
I was interviewing economist Bruce Bartlett today about state and local finances and threw in a question about when we'd know the economy didn't need more stimulus. Bartlett, who previously worked for Ronald Reagan, George H.W. Bush and Jack Kemp, gave a usefully clear answer: "When we start to see interest rates rise," he said, "we can start to think about stopping. But not before. The rise in interest rates to me will be the grass starting to grow after the winter." And just so you have it, here's a graph of monthly interest rates on 10-year treasuries:
That said, the fact that the economy desperately needs more stimulus spending does not mean that it's going to get substantially more in stimulus spending. So maybe none of this matters: Congress has decided to stop bailing out the boat even though we're still taking on water.
June 16, 2010; 2:00 PM ET
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