Stimulus Doesn't Work and That's NOT a Surprise

SEE HERE One of the scary things is how little economics the average person knows. It seems a rare quality to actually know any fundamentals. The government stimulus story is a case in point. What is the rationale for expecting that the government spending money will do anything useful?

Where does the money they spend come from? It comes from you either immediately in the form of taxes or over a longer term in the form of inflation of increased interest rates on all loans. In any of these cases the money that the government spends is money that is then not spent by the tax payer or squeezed out of the tax payer somewhat more slowly in the form of more expensive loans or more expensive goods. Does that sound like stimulus?

There can be some stimulus in the short term because it takes a while for the economic signals to travel through the economy in the form of higher prices, higher taxes and the like. In the longer run the result is actually to depress the economy because the money so spent is typically spent wastefully. Government is a poor steward of money. It's not their money. No-one is every as good a steward when they're spending other peoples' money as when they are spending their own. That's just life. The bottom line: Stimulus doesn't stimulate. If the trillions we've blown doesn't show that then I don't know what will.