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Economic Stimulus: Well, it sounds better than Uh-Oh!

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Imagine how bad the economy would have to be for the president of the United States to admit that under his leadership, the country was going down the tubes so decisively, that 10 months before election he had to go on TV and address this horrible reality.

 

Now, imagine that you are a member of Congress and you are currently running for president and find that the people hold a little resentment for you also, due to you and most of your 539 cohorts being equally culpable for sitting on your posteriors and watching it all unfold without so much as a word.

Okay, quit imagining, its real, its here, its game time and it’s called a recession. As a member of Congress, saying that your oversight of the approaching recession was due to your having been in the restroom for the past eight years or so, probably wouldn’t fly. Or saying that your grandma died and you were at the funeral the day the economy went to crap probably won’t work either. So ya gotta hatch a plan.

And we certainly have plenty of plans to go around. There is the Bush plan, Hillary plan, Barrack plan, McCain plan, Edwards plan, and all have two things in common, one, none will work, and two, “let’s bribe the idiots until after election by giving them some of their own money and neglecting to tell them that they have to pay it back.” Brilliant, absolutely brilliant.

Let’s see how many ways this plan will backfire. But before we do, shall we determine why we have a problem of this magnitude to begin with? The president and Congress seldom use the approach of identifying the real issue and elect instead to treat the symptoms until the patient dies. But not us, we want to treat the problem. And that problem is that Middle America is either unemployed or doesn’t have livable wage employment. It went to China and India.

So how will giving $800 to the person who is in trouble due to being unemployed or underemployed solve any long term problem? It won’t. But then, November of “08” isn’t a long time, so a short term solution will do. It is that simple is it not?

I want to quote something from a little book that never leaves my desk. “The fact that it is extremely difficult to induce a business recovery by increasing the purchasing power of the individual consumers is being impressively demonstrated in this depression.” Leonard P. Ayres, in “The Chief Cause of This and Other Depressions,” 1935.

Your see Mr. Ayres of the Cleveland Trust Company had written the booklet by request of Congress some six years into the Great Depression and observed that giving the citizens money to spend had no positive effect on real job creation, and resulted only in having to continually give the citizens more money each and every month and putting that bill on the cuff.

Nothing has changed since that writing except the new faces in Congress who have failed us miserably, who do not read history, and who will repeat the errors of past politicians even in the face of evidence suggesting the unwanted outcome.

A one time infusion of cash will have little or no effect on job creation, and that is the problem; or am I missing something?

 

www.kingofsimple.com

Mike Folkerth is the author of "The Biggest Lie Ever Believed" and is not your run-of-the-mill author of finance and economics. The former real estate broker, developer, private real estate fund manager, auctioneer, Alaskan bush pilot, (more...)
 
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Don't forget, the government has been handing ... by Stephen Hart on Tuesday, Jan 22, 2008 at 6:54:50 AM