The three minimum things that even a devastated federal government can do is provide housing, which they have, and provide food, which to a great extent they control, and to keep order.
But this is a bare minimum. The individual States can contribute by producing scrip currency (CA and KS are doing this right now, in a basic way). This keeps State and local government, and commerce flowing, even if the national currency has become unstable.
This gives an opening for small scale producers and entrepreneurs to get the market functioning again. And small business employs more people than big business, so it starts to build momentum.
Many jobs just have their pay downgraded to local levels, such as doctors, school teachers, policemen, firemen, etc. They don’t ever face unemployment, because they can’t, even if they work for room and board.
This gives an opening for small scale producers and entrepreneurs to get the market functioning again. And small business employs more people than big business, so it starts to build momentum.
When people don’t have jobs, and their savings have been removed, and the market has lost 80% of its value, then what do entrepreneurs use as capital to start that business. The Great Depression proved you can’t make anything out of dust, or the air.
Small businesses cannot borrow money to stay in business and keep their employees. The numbers are growing fast in unemployment....unless Obama stops being stubborn and recalls this unrealistic stimulus, budget and makes the right decisions this economy will not wait.
The government can’t exist without taxes, and if people don’t make paychecks they can’t pay anyone. It’s a codependent economy. Wall Street is Main street, and the two cannot be seperated...you hit one hard, and the other is hit hard. We are just beginning to see this downward spiral because the free market system cannot work in this socialist environment, where it is handcuffed by government.
Pumping money into this might give a bump, but the crash later would be even harder than now...but any bump up will be temporary unless handled correctly.