Dear Mr. Berko: With all the money being dumped into the economy, why is it taking so long for things to turn around? I would have thought that the huge amounts given to industry and individuals would, at least in a couple of months, improve spending, employment and home prices. What are people waiting for? Are they spending this money, or are they saving it? So, my questions are: When will the economy return to where it was? Why are so many people still losing jobs? Why are home prices still falling? And why are big companies reporting lower sales? And how long will it take for employment and home prices to pick up? L.G., Elkhart, Ind.

Dear L.G.: The Treasury Department's printing press is a powerful force in our economy. An injection of hundreds, even thousands of billions of dollars can add mega-doses of adrenalin to stimulate it our failing economy back to life. Pumping vast sums into the system will revive lost demand, which should ramp up production, add new jobs, accelerate corporate revenues, improve earnings, boost dividend payments, expand the tax base and restore consumer confidence. These billions of greenbacks should also repair balance sheets, strengthen credit markets, mend mortgage markets, reduce toxic-assets stress, revive home prices, renew the lost confidence of our overseas trading partners and return trust to the stock market.

However, the Treasury Department's printing press is also one of the most frightening forces in the economy. While it's like pulling a bunny out of a hat, it bunny must pulled out with care. Too much money will create rampant inflation, reduce the dollar to the value of a peso and inflate wages. Too little money can egregiously prolong the recession, reduce gross domestic product and cause deflation.

If Treasury Secretary Timothy Geithner, with the guidance of Federal Reserve Board Chairman Ben Bernanke, does it right, the banking industry should regain strength, the auto industry could begin to hit on all cylinders, the housing market could prosper, retail sales might perk up, and a strengthening Dow industrial averages will begin to repair the nation's 401(k)s, independent retirement accounts and pension plans that have lost trillions of dollars in value.

Our current financial mess was several years in the making. A cure, which could be more painful than the disease, cannot happen in a matter of months. The following illustration should help you understand this delayed reaction and why it could take 18 months or longer to return the economy to health.

Imagine that the Treasury Department is a powerful locomotive pulling 100 freight cars. Now picture each of those freight cars as representing a section of our economy: lumber, chemicals, paper, electronics, plastics, automobiles, health care, home building, commercial real estate, etc. Now imagine that the Geithner is the locomotive engineer. Visualize that there are train depots representing every business in every U.S. city and that our train is scheduled to make a short financial stop and each depot.

We've all seen locomotives idling at switch crossing with a line of freight cars linked to it by hundreds of hard, steel couplings. If you look way down that line, you will see those cars are growing progressively smaller in the distance. So, when Geithner moves the throttle forward, that massive engine transfers power to huge wheels that grudgingly and slowly gain purchase on the track. As they turn, you can hear steel couplings rhythmically "thwack," like the sound of horses galloping into the distance. You can even feel the vibrations of the couplings jolting against other couplings, responding to the brute power of the locomotive. The sequence lasts about 40 seconds till the coupling of the 100th car confirms the pull of the locomotive. And it takes about 20 minutes until all the cars reach cruising speed and clickety-clack to the next station.

Of course our economy is much larger than a 100-car freight train. While it takes 40 seconds till the 100th car in our example responds to the pull, it will probably take about six weeks for the first $100 billion to wend its way through the train depots of the economy, six weeks for the second $100 billion, six weeks for the third $100 billion, and so on. This is a rough guess, but it could be 18 to 24 months before our economy reaches cruising speed.

Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775 or e-mail him at [email protected]. To find out more about Malcolm Berko and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.

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