Saturday, January 31, 2009

A Better Economic Stimulus Package

At the time of this writing, we here in the U.S. face double-digit unemployment and record national debt and budget deficits, with no sign of any of the above ending any time soon. An economic package that will ease the near-term pain is being discussed. Justin Raimondo, the guy, has made an excellent suggestion for a stimulus package that won't increase the deficit. But we're not advocating that here because it's reactionary, and we're in tune with modern economics.

Instead, I say that the economic stimulus package being discussed doesn't go far enough. If we really owe the money to ourselves, and China, Saudi Arabia and Japan will really loan us as much as we need, why stop there? Why not go all the way and give every household in America a million dollars? That would really stimulate the economy. Consumer spending would skyrocket. It's not real money right? Like my friend at work says, it's all abstract anyway, and worst case, we just repudiate the debts and start over with a new currency. It could work, couldn't it?

If you've been following along, you could reasonably conclude that you've been led down the garden path. Let's not talk about the obvious hyperinflation this program would cause. After all, nobody I talk to about this seems to believe that it could happen here. Let's talk about the recipients of the stimulus money. If they do the right thing with the money, namely pay off their debts and invest the rest, they will be in position for a modest income for life. They won't work any more, and, talk all you want about jobs being moved offshore, there is still plenty of work here that needs to be done. On the other hand, they could do what most people who win the lottery do: spend all of the money and end up broke again. In this case, the economic stimulus will be temporary at best, and the money will end up in the hands of the wealth as usual.

Now you may think that it's harmless to do these things as long as they're not done to such an extreme level. Most people would agree with you. But at what point does it become extreme enough to be harmful? Is a trillion-dollar deficit really moderate enough to be harmless?

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