So-Called Stimulation

The Economic Stimulus Plan of 2008. What a joke. Don't get me wrong, I'll enjoy the money that I get, but the fact of the matter is that there is no way possible that this will help the economy. All it does is increase inflation even more.

Let me put the economy into a nutshell for you. The government incurs a large debt from having overpaid unconstitutional programs that it can't afford. These programs are generally not opposed by voters because they bear some social give-away where the bulk of voters (the elderly) will benefit from. The government has to pay for these programs with money and so they have the Federal Reserve print them up some money to pay for it. No one regulates what the Federal Reserve does anymore and they openly admit that the money is no longer gold-backed so there is nothing in place to keep them from printing any denomination they wish. Now, by having all this new money floating around the economy, the economy seems to do well. People have more money, so more money gets spent. Lets take one small example for you to understand it better. Joe's employer gets more money due to this influx of money in the marketplace. Joe's employer provides a service for one of the companies that received the government contract to provide the social serving government program. Joe's employer gives Joe a raise finally since they can afford to. Joe takes his extra money and buys more shoes. The local shoe store that Joe shops at sees that more shoes are being purchased and signs a new contract with the shoe manufacturer to order more shoes per month. The shoe manufacturer purchases more machinery and hires new employees to deal with the increased sales. Then, the government has printed enough to pay their bills and the big company that had the contracts with the government are paid off and are no longer getting these payments. So, they quit spending. One of the places they were spending money at was at Joe's employer who provided a service for them. So, Joe's employer has to fire someone because (since everyone across the board got a raise) the company can no longer afford everyone's salaries. Joe gets the boot since he has the least seniority despite his education and experience on the job. Joe stops buying shoes and even takes back a pair that he hadn't worn yet. The shoe store owner is stuck with the new contract for all these shoes that people are suddenly not buying like they were last month. The shoe manufacturer raises their prices to offset the new equipment and workforce. The shoe store owner has to raise his prices to make sales numbers, but the taxes that he is paying on his new enlarged inventory hurts him financially. He has to let Jill, the check out girl, go. Everyone stops spending again. Unemployment goes up. Prices go up. And that's inflation.

In case you're wondering what happened to Joe, he ran into Jill in the unemployment line and fell head over heels in love. Joe and Jill got married a few months later in the judge's chambers since they couldn't afford a wedding. They continued to live off of unemployment and welfare and their four children were all born on Medicaid. The four children grow up in poverty and learn to steal from their fellow gang members to get "what they deserve" and three of the four wind up in prison. The fourth, named Jason, cleans up his act and gets a job working under a lobbyist who lobbies to do away with these society-destroying socialist programs that Jason's parents have always taken advantage of. Joe disowns Jason for this, but Jill disagrees. Joe and Jill get divorced over the deal. Jill gets all of Joe's shoes in the divorce. Not exactly a happy ending, I know. But, that's how I tell it.

Getting serious again, the government's answer to this period of raised prices and high unemployment and no spending is ironically the very thing that caused this in the first place. They'll print more money and bypass the whole trickle down system and just put it directly into the hands of the little guy. But, the same outcome will occur. When all the little guys spend their money, manufacturers will respond by thinking that they are prospering. They will buy more equipment and hire new employees, but when the money is spent and everything goes back to normal, prices will go up again to compensate for this new equipment and workforce. Way to think this one through, President Bush.

On the bright side, what do you plan to spend the money on?

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