On Monday, the Dow finished lower than when George W. Bush assumed the presidency: 10,587.59 on January 19, 2001 compared to 10,365.45 at its close on September 29, 2008.
NASDAQ, the American stock exchange, too, was lower now than it was when Bush took office: 2770.38 on January 19, 2001 compared to 1983.73 on September 29, 2008. The dollar exchange with the Euro was lower than when Bush was elected: 1.068 on January 19, 2001 compared to .695 on September 29, 2008.
Some things have risen, but not the good economic indicators. The Consumer Price Index was at 175 on January 19, 2001 and 219 by September 29, 2008. Unemployment, meanwhile, stood at 4.2 percent when Bush came into power. Today, it is at 6.1 percent.
A lot of the media coverage I have seen is pure scare-'em journalism.
The central bank can expand its reserves at will, because it controls the money supply and can create more to buy things like Treasury securities and mortgage-backed securities.
“We have a lot of money to play with,” said Kenneth Rogoff, an international economist at Harvard University. “As long as foreigners have a lot of confidence in our ability to solve our problems, we can borrow the $1 trillion to $2 trillion we need to solve it.”
But Mr. Rogoff cautioned that the real limitation for American policy makers is whether they can maintain the government’s long-term credibility. “The real constraint is not a bookkeeping one,” he said. “It is a sense of faith on the part of foreigners that the U.S. government will repay its debt. Our most precious asset is that credibility.”