Economic Stimulus is Meaningless

Many economist and experts believe that we are sitting at the precipice of recession, if we are not already in one. I'm not sure I believe them because my experience tells me that people are working and I still see lots of "hiring" and jobs available. However, for the sake of argument, I will concede that they are correct and assume that the economy is not doing well.

As in most cases these days, the government sees a problem and believes that they "have to do something." People read the papers, become worried, and demand solutions to the problem. They call their congressman and senators and ask, "How is the government going to protect me from this possible calamity?"

We've been hearing about a possible "economic stimulus package" that congress has been trying to deliver that will "fix" the problem. It appears that once again, the government thinks the best way to "fix" the problem, is to send everybody some money. The problem is, though, that this is not a solution.

Didn't we do this in 2001? It would seem to me that if sending everybody $300 would "fix" a recession, then we wouldn't need to do it again. So, that means that when this plan was tried 7 years ago, it didn't "fix" the problem, it only delayed the problem. It may temporarily "fix" a symptom, but it doesn't address the root causes of the economic problems. Why does congress think it will work this time?

The real issue I see is that the "common man" has chosen to burden himself with lots of personal debt and little savings. Many people have jobs, but are living paycheck to paycheck. Because the individual's financial situation is shaky, it causes people to feel that the economy is shaky. The truth is that $300 isn't going to "shore up" anyone's financial health. So, the most that this can do is give each family enough "extra" cash to frivolously spend while they think that the government has "helped" them.

The reality, though, will be that they are worse off because they will rush out to spend the $300, but instead buy something that is $350 or $500, thus increasing their debt load. So, they are still in the same financial situation (or worse), except they feel better because now they have a new flat screen TV, thanks to Uncle Sam.

So, the government gets credit for "doing something" even though that something does not actually fix the root cause and only has a fleeting impact.