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Milton J. Madison - An American Refugee Now Living in China, Where Liberty is Ascending

Federalism, Free Markets and the Liberty To Let One's Mind Wander. I Am Very Worried About the Fate of Liberty in the USA, Where Government is Taking people's Lives ____________________________________________________________________________________________ "Extremism in defense of liberty is no vice. Tolerance in the face of tyranny is no virtue." -Barry Goldwater-

Saturday, January 10, 2009

Explain This Economic Stimulus Plan To Me.....

Maybe I am just not as brilliant as the rest of the people in this world, but I just cannot comprehend how a government can stimulate an economy. This is what I do not understand about the plan the the Neo-Jesus and his new 'golden calf' administration has for the nation known as the USA:
1. The plan to hand out $300mm under the pseudo-tax cut title to lower income workers so that they can buy beer and marijuana. It would be more stimulative to spend money on uppers, cocaine or even strong coffee for these people.
2. There is another chunk planned as spending to build critical infrastructure. The problem is, that if it is so critical, then it would have been done already during the 'good' times that we have had over the past 15 years or so. Maybe this new critical infrastructure is not critical at all but the ones that didn't make the first cut and were not deemed worthy of taxpayer money previously.
3. More is going into general spending to so that money is goes into the economy and this is generally understood to be pump priming. Someone fill me in how this 'primes' the pump keeping the following in mind:
4. All of this sounds like a wonderful plan, but where does this money come from? Well, of course the evil rich could see their taxes go up or the government can borrow money at almost zero interest rate. However, dollars have to be either coerced out of the pockets of taxpayers or borrowed from people that are looking to invest in bonds. The problem with this money is that it is being diverted from other uses. The evil rich would have spent it on things that they wanted or invest it in new companies or in the stock market. So these funds will be diverted from investments to some kind of government mandated spending. So unless the government spending is more productive than the evil rich people's planned spending, the diversion of these resources will actually generate LOWER economic growth than would otherwise be the case.
5. So, if the government puts people to work by digging ditches, and then hires others to fill them in, this unjustifiable investment in useless infrastructure will actually decrease total economic growth by approximately the amount of the spending that government mandates. The diverted funds would have been spent or invested and this would have have the same secondary effects that the government spending would have had but without the benefit of creating anything of use for the primary spending.
6. Could it just be possible, that government 'stimulus' is nothing other than trying to make politicians look good? By making massive spending, no matter how destructive, politicians figure that they will be able to take credit for the inevitable turnaround in the economy, when the millions of independent decision makers actually figure out how to allocate the remaining capital efficiently and this allows the economy to grow. Its kind of like 'stimulating' the sun to rise and taking credit for it in the morning when it inevitable does.
Now that we entered a period when the tyranny of the majority attempts to force the 'wealthy' minority to give up their earning to faceless others. The problem is, that in this environment, we will create many fewer 'wealthy' and therefore less growth in general. We will be well on the way to serfdom.

Why people are even remotely interested in handing off so much power and wealth to handful of people in Washington is also completely a mystery to me. I think that it is time to take our nation back and think that a civil war is in the cards in order to wrestle it back form the handful of elected officials that now control increasingly large chunks of the nation's economy.

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