Can Fiscal Stimulus Revive the US Economy?

Ludwig Von Mises Institute ^ | January 22, 2009 | Frank Shostak

[dbz77]

Can Fiscal Stimulus Revive the US Economy?

Daily Article by Frank Shostak | Posted on 1/22/2009 12:00:00 AM I Want YOU to Spend Spend Spend

On Thursday, January 8, 2009, US President-elect Barack Obama said,

I don't believe it's too late to change course, but it will be if we don't take dramatic action as soon as possible. If nothing is done, this recession could linger for years.

Most economists and various commentators are in agreement. They hold that the US government must sharply increase its spending in order to arrest the economic crisis that could turn into a prolonged slump.

[dbz77]

The crisis was a credit expansion crisis, not a credit contraction crisis.

[milwguy]

Or you can send them to Hillsdale College where my son goes to learn the Austrian School of Economics as espoused by Von Mises and Hayak. Gov’t is not the solution and the more they interfere, the worse the consequnces will be and the longer the economy will take to recover. One only read Dr. Folsom’s (Hillsdale prof) book which came out last Feb., titled “New Deal or Raw Deal?” to see the harm FDR and his New Deal did to the economy and kept America in a Depression.

One quote in the book from FDR’s Treasury Secretary says it all. Henry Morgenthau (who was FDR’s Treasury Secretary and closest confidant) blows all of the liberal arguments out of the water. On May 9, 1939, with unemployment at 20%, speaking to the House Ways and Means Committee Congress, Morgenthau said “We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I am wrong...somebody else can have my job. I want to see the country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promise....I say after eight years of this administration we have just as much unemployment as when we started....and an enourmous debt to boot!”

[milwguy]

Federal, State, and local gov’t now account for over 6 trillion of our 14 trillion $ economy. That level is way past sustainable, but may soon approach 50% of the economy as the gov’t ‘stimulus’ gets going and the private economy contracts.

[bassmaner]

INSANITY: doing the same thing over and over and expecting different results.

[TypeZoNegative]

Assuming the stimulus package does go through, you know what most poor Americans are going to spend their money on?

Here’s what I usually spend my money on. I have a fixed income, so I can’t afford to buy anything that either wouldn’t last or is overly expensive. The people who would have the most cumulative buying power would be the people who have similar incomes to me.

My mountain bike, which I use for urban commutting, is made by a Tiwanese company. I need to get some new parts for my bike, such as brakes and shifters. No American company makes shifters, so I have to buy Shimano shifters, made in Japan. I would buy Trek or Cannondale but KHS is much cheaper.

I’m also planning on buying a motorcycle for medium and long distance commutting. Since it’s used, an American citizen’s going to get my money, but he in turn would probably use that money to buy a flat screen TV made by Toshiba.

I also need to fix my laptop and my PDA. My parts are made in China.

Since I’m in the constant need for hydration since I’m always on my bike, I don’t want to buy pop since it’s unhealthy and it costs much more money than just brewing iced tea and it’s too expensive for me to buy Gatorade, so I just brew some iced tea. An iced tea brewer uses Chinese parts.

Any money that we give to the populous will go to China and not to Americans,which will leave us in a bigger amount of debt. That’s why we need tax cuts for the “wealthy business owners” and not welfare benefits for people who are just going to spend our money on foreign made goods.

[arthurus]

It is cheaper to read the book.

[arthurus]

It is cheaper to read the book.
I promote those books, Hazlitt especially because any son or daughter bound for any school can be armored against the socialist drek predominant at most colleges and if they don’t go to college they are armored against Brokaw and Moyers et al. When one learns the Hazlitt book, and one cannot read through it without learning the basic point, one cannot any longer be snowed by economic falsities and canards no matter how many Greek-seeming graphs are drawn on the board or how dense the language of an instructor. One who reads that book and persists in Socialist nostrums knows he is wrong but his goals are not freedom or prosperity (for other than the rulers). For more detailed knowledge then read von Mises, then Adams, Hayek, Ricardo, Bastiat, etc. and/or go to Hillsdale.
Hazlitt does not give one a set of axioms to declaim without thinking about them. Hazlitt shows you how to think through from actions to consequences and secondary consequences and makes such “thinking through” automatic.