Posted on 07/12/2010 2:55:22 PM PDT by jazusamo
If you could spend vast amounts of other people’s money just by saying a few magic words, wouldn’t you be tempted to do it? Barack Obama has spent hundreds of billions of dollars of the taxpayers’ money just by using the magic words “stimulus” and “jobs.”
It doesn’t matter politically that the stimulus is not actually stimulating and that the unemployment rate remains up near double-digit levels, despite all the spending and all the rhetoric about jobs. And of course nothing negative will ever matter to those who are part of the Obama cult, including many in the media.
But, for the rest of us, there is a lot to think about in the economic disaster that we are in.
Not only has all the runaway spending and rapid escalation of the deficit to record levels failed to make any real headway in reducing unemployment, all this money pumped into the economy has also failed to produce inflation. The latter is a good thing in itself but its implications are sobering.
How can you pour trillions of dollars into the economy and not even see the price level go up significantly? Economists have long known that it is not just the amount of money, but also the speed with which it circulates, that affects the price level.
Last year the Wall Street Journal reported that the velocity of circulation of money in the American economy has plummeted to its lowest level in half a century. Money that people don’t spend does not cause inflation. It also does not stimulate the economy.
The current issue of Bloomberg Businessweek has a feature article about businesses that are just holding on to huge sums of money. They say, for example, that the pharmaceutical company Pfizer is holding on to $26 billion...
(Excerpt) Read more at jacksonville.com ...
Major BUMP!
“Economists have long known that it is not just the amount of money, but also the speed with which it circulates, that affects the price level.”
I found a 1919 wheat penny in my pocket this morning and I’m keepin’ it. Just doing my part to keep inflation down...
Colonel, USAFR
Commendable! :-)
I will never think it’s wrong for individuals or institutions to save. If everyone had been able to survive for a year on their savings, we wouldn’t be in the current mess.
Seems the only objective is to make our economic engine run faster and faster through increased borrowing and complicated deals and this is done at the expense of stability.
Don't blame 'em, I'm holding on to $14.27 my dam self.
” Don’t blame ‘em, I’m holding on to $14.27 my dam self. “
Dang you! Dang you!
They oughta take a rope and hang you!
Wheat pennies used to be my dad’s favorites to collect - boy that brings back memories!!
He used to take old pringle cans and collect pennies in them until they were full, but he had a special pringle can just for wheat pennies. I should ask my mom what he did with those...
It’s probably got more copper in it than the current batch!
Thanks for the ping jaz. Another good one from Dr. Sowell.
We did donate already, and have received our thankee in the FReepMail also. We hope everybody remembers to send what they can either Pay-Pal, or snail mail as soon as possible, and get this FReepathon as over with as we wish November was.
Yes, it does, given we changed to copper-zinc in 1982.
Interesting — I hadn’t thought of low velocity as the reason for the low inflation, but it seems to make sense.
The FReepathon seems to be progressing faster than it has in the last couple ones and that’s good, maybe it’s a sign of the economy doing a little better.
I hadn’t really thought of that either but it does make sense.
“.....maybe it’s a sign of the economy doing a little better.”
Awwwww you’re an optimist. :)
Yep, have always been the optimist. :-)
>> but also the speed with which it circulates,
Circulation is key - the money must be moving - it’s not.
People on steady income don’t directly experience the ebb, flow, and drought of the economy until they get fired.
Still today, too many cannot make the connection to the economic problems we’re suffering.
Brilliant, as always. BUMP! :)
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