More on Greed and Fear

Megan McArdle links to a post by Ryan Avent, who writes:

But the underlying point is intriguing -- that much of the value of action may be psychological. Even if a government plan isn't directly contributing to public welfare, the idea that something is being done which will improve things will encourage people to spend, businesses to invest, banks to lend, and so on.

As I wrote previously, this is about Fear, which is an emotion and not rational. Not I, nor Megan, nor Ryan, nor anybody else, has any idea whether government spending will lessen people's collective economic fears. My best guess is that it will not, but that's my conservative bias. Ryan is more likely to believe it will because he is more liberal than I am.