11/20/2008 05:12 am ET Updated May 25, 2011

What If The Downturn Is Long And Shallow?

Today is a good day to consider the possibility that the economic downturn will not end up being nearly as deep as feared -- but will end up lasting for a long time.

Ben S. Bernanke, the Federal Reserve chairman, has been up on Capitol Hill this morning, testifying to members of the House and saying that he thinks another round of economic stimulus is a good idea. He was not specific about what sort of stimulus he supported, at least in his initial remarks, but it is likely to involve some combination of tax rebates, extended unemployment benefits, federal aid to local governments and new spending on highways and other infrastructure. You can think of a stimulus package as an insurance policy, meant to minimize the risk of a severe recession that could then become self-perpetuating.

Mr. Bernanke's remarks are a reminder that the federal government has enormous resources at its disposal, and it is now marshaling those resources to help the economy. The Treasury is injecting hundreds of billions of dollars into the banking system. The Fed has cut its benchmark interest rate and also made hundreds of billions of dollars worth of loans. And now Congress seems likely to get working on another stimulus package. These efforts will not necessarily have immediate results. But they will have an effect, and they will serve to soften the current downturn.

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