The Economic Stimulus Band-aid

From Walter Williams at WorldNetDaily...

There are three ways government can get the money for a stimulus package. It can tax, borrow or inflate the currency by printing money. If government taxes to hand out money, one person is stimulated at the expense of another who pays the tax, who is unstimulated and has less money to spend. If government borrows the money, it's the same story. This time the unstimulated person is the lender who has less money to spend. If government prints money, creditors, and then everyone else, are unstimulated. As my colleague Russell Roberts said in a NPR broadcast, "It's like taking a bucket of water from the deep end of a pool and dumping it into the shallow end. Funny thing – the water in the shallow end doesn't get any deeper."

I've had serious doubts all along about the veracity of those claiming there's actually a recession. Our economy is more or less the same as the blood flow within our bodies. The economy is how the resources we use and need get to us and from us. When it's flowing well, then we have a good economy. When the flow is hampered, then we have problems. Several things can impede the circulation of resources within the nation. A lack of resources, which hasn't really been a factor for almost a decade. A war, which also hasn't really been as much of a factor since we don't shift as high a percentage of our resources to war efforts as we did in the past.

The #1 reason for bad resource flow in the past few decades has been public opinion. As odd as that seems, if people are fearful of not having income, they slow down their spending, creating a slow down in the flow of resources. The MSM are fully aware of this and use it whenever it becomes politically expedient. The can, and do, create a recession out of thin air, simply by grabbing the nearest hair-brained "economist" who's willing to say whatever they want for a few minutes of national television coverage. It takes just a few of these and people will becomes restless, and put off larger purchases they'd been considering. Then we have a noticeable slow down, which can they spark other "economists" to jump on the band-wagon and start screaming "RECESSION! RECESSION!"

Once people start believing there's a recession, it will then happen. They did it when George Bush Sr was running for re-election. In the fall of 1991, out of thin air, the networks started grabbing people calling themselves "economists" who would gleefully predict a horrible recession. sure enough by the time spring rolled around, enough people had bought into the lie, that they'd slowed down their normal purchasing and created a recession. However, the president was able to curtail it, and get it turned around well before the election. As quick as they were to report a non-existent recession (in order to create one) the media was equally slow in reporting the actual end of the recession they created, holding off on the story for months, until after the election.

One ironic aspect of the current invented recession is that the stimulus package may actually help to exacerbate it. If I understand correctly, tax refunds will be held up until Congress finally makes the stimulus package, law. When Republicans proposed the Earned Income Credit, Democrats stalled the bill for years until enough time had passed that they could then lie and claim it was their idea. Meanwhile the people the credit was there to help continued to suffer from the effects of confiscatory taxes. When Republicans proposed the family tax credit, again Democrats held it up for years. Their reason that time was that they opposed the income limit on the tax credit. Democrats would rather see poor families suffer than allow one single "rich" family get a few extra dollars. The GOP wanted the cap at $250,000, the Democrats wanted it at $100,000 and it took years to finally reach a compromise.

Now with this stimulus package, the same argument is being made. Democrats want a low income cap on it, but if all tax refunds are held up until a compromise is found, Democrats could well cause a tremendous amount of suffering to families that rely on that refund as a welcome, economic help at this time of year. By making people wait, while they nitpick over trivialities, they could very well cause an even worse recession, that the eventual stimulus package can't even make the minor adjustment to that its proponents claim.

Posted by Danny Carlton at January 30, 2008 7:27 AM