I’d like to preface this post, which is mostly about economics and domestic politics, by saying that those two things (along with Palestinian plumbing) are most certainly world politics.

The elections coming up provide for a whole load of excitement. What I’m most concerned about is the world economy. We seem to be dangerously close to a Keynesian Liquidity Trap, wherein interest rates can’t really go any lower, and it seems like the Federal Reserve System is grasping at straws in an attempt to patch up our sinking ship of an economy. With the fee charged to banks when they borrow from the Fed currently at 1%, there’s really no leeway for further effective change on the economy through that avenue. But these technical matters are almost superfluous; what really matters are consumers’ expectations of the future of the economy. If people think that the economy is going down the drain, they’ll pull their money out of the markets and keep it in as liquid a form as possible. If money is being stuffed under mattresses instead of stuffed into banks, there is less capability for small businesses to take out loans from those banks. It’ll be a downward spiral. If, on the other hand, people think that the economy is going to do well, they’ll keep their money where it can be utilized.

People are expecting the economy to do better if Obama wins – 80% of economists in a poll conducted by The Economist think that his policies are better. If he wins, the economy will do better.