How’s that stimulus working?  

With inflation set to rise, and the economic outlook gloomy, it could be time to ask how the fiscal stimulus has worked out.When the credit crunch first struck, I suggested to a colleague that perhaps it was time to whack up interest rates. If the price of credit went up, surely there'd be more of the stuff? Amidst much gaffawing, I was told that that'd be the worst possible thing one could do. What was needed, I was informed, was a cut in interest rates and government spending to stimulate demand. And, besides, didn't I know that "all the experts agreed"? So. A couple of years on, how is that conventional wisdom looking?Having lent out much of the money government gave them, banks are having to lend out their own again. So guess what? Credit is getting tight again.All that state stimulus seems to have kept demand going. But only by ensuring we become further indebted as we continued...