State induced recession

   The us recession was caused by a contraction of the money supply and not much else. Whatever the motivation the Federal Reserve had in increasing interest rates, it was mostly guided by the fear of inflation and trade deficits.

  A lot of inflationists questioned the united states money supply. It was not so much quantitative easing but the huge burst in lending. The Federal Government was so embarrassed about how quickly the money supply grew, it stopped publishing the M3 supply data to the public. The government did not mind telling people how much money they printed, but they did mind telling the public how much money was being lent.

  While lending is great, because it adds new money to the economy the same effect that can be created by dropping gold bars from helicopters. The problem with additional money, while making people wealthy, also helps boosts inflation. Giving people more income means giving them the impetus to spend, thus driving national and global prices skyward.

  Personally, I think the Federal Reserve was simply embarrassed by all the whining coming from inflationists. A group that I somewhat adhere to. Others think it was a Federal plot to reduce its trade deficit to foreign states thus preventing them from over-accumulating debt. I tend to agree with the former than the later since national debts in the 21st century do not mean very much.

  The effect took years to implement and even the Federal Reserve questioned whether their policies were working or not. They had to raise interest rates a total of 17 times before the economy finally crashed. And when it crashed, inflation was effectively controlled. Deflation in wages, deflation in commodities, deflation in housing prices, deflation in food prices.

                                                        Above: Gold price for 2008

  The trade deficit was reduced, and foreign countries were forced to print their own money to account for the contraction in global liquidity. The object is very simple. In order for there to be more money in the world, someone needs to print it. We do not care who prints it so long it is being print.

Chinese banking officials were reportedly considering establishing a fund worth between 600 billion and 800 billion yuan to purchase domestic shares listed on the Shanghai Stock Exchange, particularly those in the Shanghai Composite, in the event the Shanghai Index fell to 1,500 points.^[4]

On March 6, 2009, China's National Development and Reform Commission announced a revision of the stimulus and published a breakdown of how the funds would be distributed.
Public infrastructure development took up the biggest portion -- 1.5-trillion yuan, or nearly 38% of the total package. The projects lined up include railway, road, irrigation, and airport construction.

BEIJING - So far an estimated 22 million jobs have been created in China from the government's 4-trillion-yuan stimulus injected into the economy since the international financial crisis hit.