Crusty Logic Christianity & Liberty

Economy: It’s the stagnation stupid

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Obama and other liberals (or progressives or whatever they want to be called this week) keep wanting to pour more money in to the economy to stimulate it and they want to meddle with every aspect of the economy.

'Spender of Last Resort'

Robert Reich wins the ridiculous award with his statement that the US Government is the ‘spender of last resort’ and that what we need more than anything is for the US Government to spend.

 

Obama has just rolled out $500 billion Stimulus III.

The problem is that all of this simply drops in to an effective black hole.

Our economy is stagnated. It’s a machine that’s in neutral. Pouring more stimulus money in to this economy is like pouring wheat in to a thresher that’s not running. It’ll go in, but nothing will happen.

We don’t need government stimulus or meddling. We need to get the economy running again. We need consumers, both individual and corporate, to start doing things, we need companies to start expanding and investing in the future and hiring employees.

Companies aren’t expanding or hiring because they’re scared of the future. They don’t know what the government will do to them next. They don’t know what new regulations are coming. They don’t know what new taxes are coming. They’re concerned about increased unionization. They’re concerned about how Obamacare will impact them. They look at the government raid on Gibson Guitars or the government telling Boeing they can’t operate a plant in a right-to-work state and they’re scared to death.

The entire business sector is pretty much in a holding pattern – from the small three person company to the largest mega corporations.

Individual consumers are in a similar boat. Most of those who make over $250k per year are holding back because of their fear of increased taxes. Most people who are invested in the stock market, from the wealthiest to the admin assistant who gets some profit sharing stock every month, are holding back because their stock value has tanked, and that gives them a huge sense of poorness. All of these folks aren’t eating out as much and they’re not buying boats or electronics or furniture or other stuff.

All of these consumers, from a single gal to GE, aren’t spending, they’re hoarding. Any stimulus money poured in to this anemic economy doesn’t go anywhere, it just gets hoarded. You can pour all the money you want in to this economy and nothing will change.

And this is the way things will stay until everyone feels comfortable again. This is the way it will be until we get rid of onerous government regulations, meddling, and high taxes and do so in a way that sends a message that these changes will be permanent and that people can depend on this environment for a long time and that they no longer need to fear investing in their futures.

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