Stimulated

Many would like think that Franklin Delano Roosevelt's New Deal got America out of the depression, and that the current administration's similar government interventionism would have the same perceived success. But the actualization is that the New Deal prolonged the problem it was supposed to relieve, and stifled the recovery of private enterprise with taxes, public projects, and spending that where short term quick fixes. The left has tried to compare both situations, and assume the same big public spending will fix the problem of the current recession. But the only guaranteed path towards recovery is with capitalism, American ingenuity, and free markets.


Stimulus Numbers

This past Sunday on Meet the Press, David Gregory confronted Vice President Joe Biden on how they came up with the economic number of 150,000 jobs made or saved after 100 days the bill was signed. Biden said that the administration uses a decades old econometric model to correlate the economic circumstances of the nation with the creation of jobs, and that the model is used by the Council of Economic Advisers. He also goes on to say how 600,000 more jobs will be created in the next 100 days because “this thing is beginning to roll out.” He then claims he doesn't even know anyone who is arguing about the economic model when Mr. Gregory showed him a part of an interview on Tuesday of his own economic adviser Jared Bernstein, who said that the president's citation of (saving or creating) of 150,000 jobs is “an estimate” based partly on what the economy would look like in the absence of the stimulus package. But Bernstein said he could not break down how many of those jobs were created versus saved. Later the VP went on to say, “everyone guessed wrong" on the impact of the stimulus, economy was worse off than anyone thought.”


Money Comes From...

The theory of government spending a nation out of a recession by creating new demand, and growing the economy is inherently flawed because every dollar the government spends must be taxed, or borrowed. This method also makes us susceptible to foreign interference, and dependency, one of them being China owning 24.07% of our Treasuries as of Jan 09. So no matter how much spending is done no real wealth is acquired efficiently with this method. Tax cuts on the other hand give the money back to private citizens to spend the money more wisely. Keynesian economics has been a failure in the past and will only alleviate symptoms in the short term, leaving us with less wealth.

Insurmountable amount of money is being spent on the guise of “it could be worse if we did nothing”. But the way Washington is pursuing this, maybe doing nothing is not as chaotic compared to using Keynesian theories. So as of now, can you say you are feeling stimulated?