The Economic Surge: Pushing On A Rope (February 11, 2008)
The proposed “economic surge” seeks to inject about $150 billion into the economy. Some note that the $150 billion will be borrowed from China to buy toys and other goods from China. They give us the dollars and the goods. They have the goods on us. And the dollars. Business as usual.
Some observe that the recent rise in gasoline prices has increased the cost of living for citizens by about $150 billion. They say that the economic surge will offset that expenditure. However, the additional payment for gasoline should be seen as a direct payment–foreign aid–to many dangerous political regimes. The U.S. is directly funding terrorist activities rather than taxing gasoline and both keeping the additional taxes and reducing consumption of oil. [See the e-ssay dated December 18, 2006 entitled “Pass The ‘Terrorist Tax’”].
Few are saying that the $150 billion dollar economic surge is a tax. It is a tax. It is a tax on the kids. The “Kid Tax” is more important that the “Terrorist Tax.”
The problem with the economic surge is that it is a chimera. The Federal Reserve action may prevent a panic on Wall Street in the short term, yet it is creating a greater problem on Main Street now and in the intermediate run. The fundamental problem is not just the number of dollars available for circulation in the economy, it is the individual consumers who are the fuel of the economic engine. The public, like its government, is spent. All are in debt up to their tonsils. More debt, private and public, is not the intermediate run answer. The lowered interest rates are creating a disincentive for saving when everyone of every political strip states that we should be saving. The impact of lower interest rates is being felt again by the elderly who are now earning less. [See the e-ssay dated April 25, 2005 entitled “Our Friend The Fed”].
Bumper sticker of the week:
They matter (Budget Deficits, Personal Deficits, Trade Deficits)