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Summary of economic stimulus package
This Q & A, from reader Spiker, is the best I have seen. It sums up the economics concisely:
This year, taxpayers will receive an Economic Stimulus Payment. Here is a brief explanation:
Q. What is an Economic Stimulus Payment?
A. It is money that the federal government will send to taxpayers.
Q. Where will the government get this money?
A. From taxpayers.
Q. So the government is giving me back my own money?
A. Only part of it.
Q. What is the purpose of this payment?
A. The plan is that you will use the money to purchase a high-definition TV set, thus stimulating the economy.
Q. But isn't that stimulating the economy of China ?
A. Shut up.
Reader Mindbuilder has a comment, for some reason blocked by the spam filter:
The Q & A is insightful and funny. I love it. But it has a major flaw. We're not getting the money from taxpayers, we're borrowing it. This might truly stimulate the economy. But unfortunately it might also drag the economy down and destroy the currency in the long run. The problem is that if you spend more than you make, and you borrow to pay back your previous loans, your debt grows exponentially. There comes a point where no one will loan you more money to pay back your loans and you can't cut spending enough to pay them back either. At that point the government's only choice is to print so much money that it becomes worthless or at least has much less value. Then a lot of people loose a lot, especially the creditors and anyone holding cash or similar assets. In effect, the suckers who loaned money to the government (or saved cash) get to pay our taxes when our government finally rips them off by repaying them with worthless money.
I'm worried that for years we've been borrowing in order to maintain a level of prosperity that we can't sustain. And when those loans finally catch up with us, we'll be facing tough times. As the tough times come, our country may engage in increasingly desperate and COUNTERPRODUCTIVE attempts to maintain the standard of living that we've come to expect as normal.
If we're lucky, advances in technology and productivity will stave off catastrophe, but that may just be wishful thinking. Unfortunately none of the voters even know what money is or how its created (the important parts of the process don't involve green ink and printing presses). It's been said that a democracy only lasts until the voters realize they can vote themselves money.
The only solution I can think of is a balanced budget amendment. Maybe such an amendment could make allowances for a slightly out of balance budget for limited times during economic downturns.
Comments
pay no attention to the man behind the curtain. The great OZ has spoken.
Posted by: barack obama at January 28, 2009 08:49 AM
Sounds much like a discussion i heard recently
Posted by: Mrs. Flam at January 28, 2009 08:58 AM
I went to the gas station the other day and filled up and said charge it to 0bama, the attendant called the cops.
Posted by: tom gunn at January 28, 2009 09:31 AM
This is wrong. They are not giving people back part of their own money, they are giving money to people who, in some cases, didn't pay any money. The people who pay the most get back nothing.
Posted by: Jim at January 28, 2009 10:43 AM
Anytime the government gives money to someone they have to first take the money from someone else.
Posted by: Pat B. at January 28, 2009 11:52 AM
Mostly they're stealing the money from your children.
Posted by: Jim W at January 28, 2009 01:33 PM
I don't think it's quite correct.
Should read we are sending your tax dollars to the less fortunate. Reparations if you will.
And then we all pay when the currency tanks.
Posted by: tarpon at January 28, 2009 07:12 PM
> Mostly they're stealing the money from your children.
Actually, they're merely promising to steal it from your children.
There are three ways to payback govt debt: taxes, inflation, and default. Each have their downsides, but I think that default is starting to look really good. (Before you say "but folks will start to view govt bonds as a risky investment", consider whether that's a bad thing.)
Posted by: Andy Freeman at January 29, 2009 08:01 AM
"Anytime the government gives money to someone they have to first take the money from someone else."
Usually a true statement, however, the US Government can print up as much cash as needed. The down side is that the dollar is worth less world wide.
Posted by: Tom at January 29, 2009 04:40 PM
"Anytime the government gives money to someone they have to first take the money from someone else."Usually a true statement, however, the US Government can print up as much cash as needed. The down side is that the dollar is worth less world wide.
Always a true statement. As noted, in this case the dollar is worth less. They've taken the money (or at least its value) from anyone who happens to be holding money, either in their pockets or their bank accounts, anyone who has contracted to supply goods or labor for a particular monetary price, and anyone who has lent money, including bond-holders. No matter how the fool themselves or others, it never appears out of thin air but is taken from somebody's pocket.
Posted by: Ken at January 30, 2009 09:54 AM
Amen, ken
Posted by: straightarrow at January 30, 2009 11:31 PM