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Both sides of the aisle have debated whether or not FDR's policies worked for the economy, but one thing that cannot be refuted is that FDR helped to restore confidence. And, that is a powerful thing.
When confidence in the economy is gone, everything goes to hell in a handbasket. Take the stock market drop for example. "Money" didn't go anywhere. It's still there. The guy holding the stock that dropped in price may think money disappeared, but it didn't. The person from whom he bought the stock received money for that stock. The MONEY is still there.
What happens is that confidence levels dropped. When that happens, people hold onto the money they have (if they can) and they don't spend it. It doesn't go into circulation and is not used for purchasing goods and services. This in turn causes the providers of those goods and services to realize less revenue. Less revenue means that the provider cannot afford to maintain the employment of its workers. Layoffs follow which leads to high unemployment and even less confidence. This is a vicious cycle that can only be mitigated when confidence is restored.
The Obama Administration knows this. It's Econ 101. If one can restore confidence, then money will enter circulation faster than if circulation were reliant on basic needs alone. The very act of passing a stimulus plan will, hopefully, have some effect on confidence. This is why there is a sense of urgency from the administration.
Confidence is key.
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