Will the New Government Programs Promote Economic Stability Or Stagnation?
Watching all of the coverage of the latest economic stimulus on television, one question comes to my mind repeatedly.
Has the government been holding out on us all? After all, if the point of the spending bill is to get the economy going again, create jobs, put people back to work, save the environment, and get credit markets unfrozen, then the government has a lot of explaining to do about why its previous packages failed.
The new stimulus will provide nearly $800 billion for the president to spend on a variety of projects, plus a number of tax cuts.
Will this be the magic $800 billion that saves the economy, despite the already nearly $8 trillion that the Federal Reserve, Treasury, FDIC, and other government agencies have spent or provided to the banking, insurance, and auto industries? It always seems like "this next package" from the politicians is what will get the economy moving again.
But there is never any acknowledgment of the failures of previous plans.
Stopping foreclosures is another of this plan's goals, yet every program the government has put in place to address the foreclosure rate has failed.
Hope Now, Project Lifeline, the Hope for Homeowners Act -- none has yet put more than a couple of band-aids on a ruptured artery.
But over and over again, Americans are promised that, by simply stealing more of their money through borrowing and inflation, the government can put them back to work, create new green jobs, save the planet, and lower taxes.
The magic wand that will create all this wonderfulness out of a corrupt economy fueled by easy government credit is, of course, the printing press.
Trillions of dollars have already been created, and trillions more are on the way.
While the $800 billion stimulus bill is not the beginning, it is also not the end of the government interventions in the marketplace.
The wrong regulations set up the housing market to fail, and now new regulations will prevent the entire economy from recovering.
On top of that, we will all have to pay our share of the numerous bailouts of industries that are failing for very valid reasons -- they are out of money, out of customers, and out of trust.
Creating $8 trillion in the space of a year, with nothing but more spending planned for the future, will result in only more problems for the economy.
Instead of causing the next Great Depression, where money was tight and unemployment high, the government is setting us up for a far worse fate: an inflationary depression, where unemployment is high but prices keep rising anyway.
After doing its current duty of covering up losses at financial institutions and other industries, all of the newly created money will eventually find its way into the market and drive up prices.
Now is the time for Americans to begin saving more, paying down debt, and reducing consumption.
But these actions are exactly what the government is preventing from happening.
A reduction in consumption may cause some companies to go out of business.
However, businesses need savings in order to increase production, and both the savings rate and the industrial base in the country have been decimated over the past decades.
If the government does not allow the correction to occur, the current recession may continue for years.
The government can not stop foreclosure, save the planet, or create lasting jobs for a large segment of the country.
All it can do is redistribute money from successful businesses to failed ones, destroy the currency, and encourage the exact opposite of what is needed to get the economy working again.
Unfortunately, destroying what is left of the economy seems to be exactly what the politicians are trying to do.
Has the government been holding out on us all? After all, if the point of the spending bill is to get the economy going again, create jobs, put people back to work, save the environment, and get credit markets unfrozen, then the government has a lot of explaining to do about why its previous packages failed.
The new stimulus will provide nearly $800 billion for the president to spend on a variety of projects, plus a number of tax cuts.
Will this be the magic $800 billion that saves the economy, despite the already nearly $8 trillion that the Federal Reserve, Treasury, FDIC, and other government agencies have spent or provided to the banking, insurance, and auto industries? It always seems like "this next package" from the politicians is what will get the economy moving again.
But there is never any acknowledgment of the failures of previous plans.
Stopping foreclosures is another of this plan's goals, yet every program the government has put in place to address the foreclosure rate has failed.
Hope Now, Project Lifeline, the Hope for Homeowners Act -- none has yet put more than a couple of band-aids on a ruptured artery.
But over and over again, Americans are promised that, by simply stealing more of their money through borrowing and inflation, the government can put them back to work, create new green jobs, save the planet, and lower taxes.
The magic wand that will create all this wonderfulness out of a corrupt economy fueled by easy government credit is, of course, the printing press.
Trillions of dollars have already been created, and trillions more are on the way.
While the $800 billion stimulus bill is not the beginning, it is also not the end of the government interventions in the marketplace.
The wrong regulations set up the housing market to fail, and now new regulations will prevent the entire economy from recovering.
On top of that, we will all have to pay our share of the numerous bailouts of industries that are failing for very valid reasons -- they are out of money, out of customers, and out of trust.
Creating $8 trillion in the space of a year, with nothing but more spending planned for the future, will result in only more problems for the economy.
Instead of causing the next Great Depression, where money was tight and unemployment high, the government is setting us up for a far worse fate: an inflationary depression, where unemployment is high but prices keep rising anyway.
After doing its current duty of covering up losses at financial institutions and other industries, all of the newly created money will eventually find its way into the market and drive up prices.
Now is the time for Americans to begin saving more, paying down debt, and reducing consumption.
But these actions are exactly what the government is preventing from happening.
A reduction in consumption may cause some companies to go out of business.
However, businesses need savings in order to increase production, and both the savings rate and the industrial base in the country have been decimated over the past decades.
If the government does not allow the correction to occur, the current recession may continue for years.
The government can not stop foreclosure, save the planet, or create lasting jobs for a large segment of the country.
All it can do is redistribute money from successful businesses to failed ones, destroy the currency, and encourage the exact opposite of what is needed to get the economy working again.
Unfortunately, destroying what is left of the economy seems to be exactly what the politicians are trying to do.