Economy and General Discussion

The way I see the stimulus package presented by the government is that households across America will receive some money and hopefully that will go back into the economy and generate consumer spending, company profits, and higher wages/more jobs. This will create higher economic activity, eventually leading to a higher US dollar and higher interest rates.

Now, that's nothing new. However, wouldn't this stimulus package only achieve this result if prices of goods were lowered simultaneously? If prices remained just like they are now, and a stimulus package arrived, the only thing that we would achieve is a delayed recession.

I'm going to look at one good, Oil. If the price of oil was coming down and this stimulus was brought into the economy, then a recession could be averted. My basis for prices going down is supply and demand. Since demand for goods has dropped, prices must be lowered to create more consumer interest. If prices are lowered and the consumer has some more money to spend, companies will receive higher earnings and the stock market will be rejuvenated.

With homes becoming cheaper and cheaper, houses are looking more attractive than rent. Therefore, rental rates are decreasing. If what I said in the above paragraph works and the economy is saved from recession then housing prices will still go down as there are still problems, but eventually people will have more money with better consumer spending/higher wages and they will look to buy a home. Interest rates will not go up immediately but will take effect as spending is increased, so people will continue to buy homes before the rate starts going up and will continue to buy them as the rate is hiked because they will have more money from the new economy.

These are just some thoughts that I share with you. Please, send me feedback and correct me on anything, input your thoughts.