Meanwhile our highly trained finance ministers are doing their best to prolong the slump. Nelson Schwartz reports in the NY Times the Treasury Secretary Geithner is have difficulties defending the US fiscal stimulus because his colleagues in the group of 8 have decided that happy days are here again:

Talk is already turning to what economists are calling the “exit strategy” on how to cut looming deficits and rein in spending without leading back to recession.

The finance ministers said they “discussed the need to prepare strategies for unwinding the extraordinary policy measures taken to respond to the crisis once the recovery is assured.”

They did not identify any particular measures, like cutting spending, raising taxes or reducing borrowing. Instead, the G-8 ministers said they had asked the International Monetary Fund to help plan exit strategies.

This despite the fact that the US economy is still shedding jobs and the European economies are doing even worse.

A note to the folks who are worried about Government borrowing. The latest flow of funds data from the Federal Reserve show continued decline in net borrowing. Private borrowing has dropped more than government deficits have increased. See Krugman for the graph. Meanwhile the domestic savings rate has risen.

The way that our economy is put together, savers need to loan their savings to others who will use them for investment. Maybe it would be better if the private sector disposed of these funds. Wonks Anonymous is sure that it would use them to make productive investments, McMansions in Tracy and so on. If the private sector is not in the game right now, and it is not, the government needs to step in.