Not only is Washinton’s tentatively agreed-upon “stimulus package” not likely to do much to help, but it also is almost certainly absolutely counterproductive (on a macro scale, that is; for all who receive the “rebates,” the immediate, short-term benefit, when it finally comes in late May or probably June, will obviously be somewhat helpful).
The package is like pushing on a string. For a problem caused by lack of investment and production, it takes money away from investment and production and puts it toward consumption. It is demand-side stimulus for a supply-side problem. It redistributes money to individuals in the short run from their own future and their children’s future in the long run. In doing so it adds to the national debt, which has a tendency to push interest rates higher, and which thus in some sense, to at least a small extent, crowds out other investment. Plus, by the time, four or five months away, when anybody actually starts seeing this money, the circumstances will be different.
The stimulus will do nothing to change productive behavior, but instead merely encourage waste.
And the package is a fiscal cure for problems that are not fiscal in nature but monetary. The problem is not a lack of dollars, but a weak dollar. It’s not a lack of jobs, but the worth of the earnings. First-time jobless claims actually have fallen for four weeks in a row.
Conservatives in Congress ought to vote against this idiocy.