I thought it was important to talk about the failure of stimulus. I've always been against this, but to really understand, you have to recognize why they believe it to be true. We all believe in things, but often why you believe in it is more important.

There are inherent problems with the philosophy behind this stimulus. You'll be noticing a few very important things. The first is that the average Joe and below (Middle Class to Poor) are the ones that will be stimulating. Secondly, the belief that consumption is the key to stimulus. Lastly, that money can be taken from producers to fund this.

I suppose the whole philosophical backing comes from the idea that consumption is the key to stimulus. I often hear people say that if people would just spend there money, there wouldn't be a problem. Even though spending is part of what makes an economy run, it really isn't a stimulus. I don't like the word stimulus, so I'll just call it by what the objective is, more wealth for the economy. That's essentially what we want.

We all know that if the government taxes people in the economy and gives it to other people to spend, we haven't created new wealth. All we've done is redistributed wealth, not increased it.

The government has choices and it appears like this one is going to take from the productive and give to the middle class and poor. They'll give this through rebate checks, bigger welfare checks, bigger unemployment checks, etc. The idea is that the little guy needs to spend their money to stay afloat and that will force them to use it, instead of saving it or paying off debt.

The real heart of the economy comes from the producers. People like to think that pieces of paper in their wallet are wealth, but they're not. They're only representations of wealth in the economy. Just because the government gives you more paper, doesn't mean the producers have created more wealth.

That's my whole beef.

It is the producers that create the wealth, the jobs, and the standard of living we have. Despite all the anti-capitalism and anti-profit people in Washington, this fact will remain. You can curse them out and hate them all, but they're the ones producing.

What Washington and all the other governments around the world need to do is make it easier for the producers to get to work. That means corporate taxes need to be cut or eliminated. That means capital gains taxes need to be cut or eliminated. Red tape needs to be cut back or eliminated.

If you want people to be working, you need to allow producers to produce because that is the only thing that will ever create a job.


Posted by Christopher | 7:13 PM | , , , | 0 comments »