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.