Economic Stimulus Package

Ok, let me get one thing out of the way before I begin. I am opposed entirely to this notion, partly because I am a free market enonomist and partly because I can see right through the red tape in the government.

From a general standpoint this looks like a good idea right? True, but here is some history. The money you hold in your hand is worthless, look at what it says, “Backed by the full faith of the US Government”. It started when it was taken off the gold standard in 1971. All you hold in your hand is a piece of paper, fiat currency for a better term. The government can print as much money as it wants now, dumping it in as fast as it can print.

In simple economic terms, think of it this way. There are two variables, supply and demand. Supply is how much of something you have at a given time, demand is how many people want what is supplied. The more demand there is for supply, the more it shrinks to nothing. The more supply there is, the less people want of it, because there is so much supply floating around. Big and small companies deal with this all the time, hence why they try to find a nice median range to stick in.

That said, apply the same to the government printing money. If more and more money is printed (supply), the less people will want of it (demand). It will literally become worthless if there is too much of it. If you understand this concept, you are on solid ground.

Now back to the topic at hand: the Stimulus Package. Think this will work, applying what you just learned? Absolutely not and here is why. Throwing money at a problem will not fix the economic mess we are in. If anything, it will make it worse. You are once again bumping the supply factor out more to the point where the demand is less and less. Secondly, this is not going to create jobs or stimulate the economy. Why? This money is just going to places to try and bring it back into the black. The majority of it will not reach there though. Why? Greed. I can smell it written all over this package, literally it reaks of the odor.

If this was really a “stimulus package”, here is where it should go. It should be going to the local economies to help prop up the businesses there. Strong businesses mean a stong local economy. Stong businesses mean more money is flowing around to the various areas. Strong businesses also mean they can support more employees, hence they hire more people. See what I am saying?

Although the best piece of advice regarding this whole matter is… “The best stimulus to our economy is no stimulus at all.” I’ll explain this quote in my next post. In the meantime, what do you think about this? Anything you care to add, anything you need clarified? Comments are open.

2 thoughts on “Economic Stimulus Package

  1. I couldn’t agree w/ you more Taylor! The money should be used to either directly pay off the bad debt so banks will start loaning again, or directed to the private sector so they can innovate and employ.

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