Since the economic collapse I have been saying that demand needs to be created not liquidity–for without demand nothing will move in the economy. I even have a page on the subject. We have pumped billions into banks and still not much is happening in the demand arena. We have tried to pump dollars into the infrastructure and again not much demand has been created. Then what shall the admin do to create the demand that is needed to jump start the economy?

Well they had a good start….with the cash for clunkers program. The WaPo is reporting:

Passed by Congress in late June to help the flagging U.S. auto industry and launched just a week ago, the $1 billion program gives vouchers worth up to $4,500 to consumers who trade in gas-guzzling cars for more fuel-efficient models. The highly publicized effort was scheduled to run until Nov. 1, or until money ran out. It was not expected to run out of cash so quickly.

The effort, formally known as the Car Allowance Rebate System, or CARS, appeared headed for a temporary shutdown at midnight Thursday. Federal transportation officials became increasingly concerned that the program’s popularity with consumers could drain its budget by week’s end, according to sources familiar with the discussions who spoke on the condition of anonymity.

The government’s “cash for clunkers” program, aimed at boosting stagnant auto sales, is almost out of money, putting its future in question, according to sources familiar with the effort.

Gee, sounds like they created demand…..you think that this could be an answer to the economic crisis? Some of us have been harping on that for a long time and it looks like we were correct in our premise.

Now that is what I am talking about…..create demand and the economy will start working again.  Go figure!