Friday, February 20, 2009

The Badge of Dishonor

I wish to state for the Record that, for once, I agree with Robert Barro, who thinks the multiplier will be close to zero. Gary Becker and Kevin Murphy can give the Reader some sense of why the multiplier will be low, though they are more optimistic than Barro. My personal vendetta with the Plan (Everyone else can call it a Package, but it is not tied up in a pretty box) devolves upon its few elements of Production expansion, its spread across the landscape to give Everyone a piece of the Pie, and its real potential to balloon Resource Costs. I would change the name of the thing to: How to ignore Consumer Demand Decline by letting the Government Spend It.

I just listened to a Radio Advertising Spot which mentioned Elvis, Spaceships, Big Foot, and a State lottery inside 30 Seconds; why does this remind me of the Stimulus. Maybe this Commentary may enlighten about the overall effect. It talks about Government taking Risks. Who is taking the Risks? All the Policy-makers will be out of Government by the time any of the Loans come due. Who is spending the Money? I can assure Everyone it is not the Households struggling to pay their bills; though I guess they also struggle to pay their Taxes. If Luck holds, the Money will all be spent and Government policy-makers will have found alternate employment before the real Crisis of repaying the debt occurs. Risk to Reputations? Get real! They had no reputation to preserve after announcement of this Plan.

Here are the real Nuts and Bolts of the Economy (Are they talking about the Crazies and Terror-stricken in the Market?). They are trying in the article to convince that Inflation is not actually here, but they only mention no Price change when Consumer Demand is way down. What happens when the later returns to normal, and there is competition for the Goods and Services? The Readers should understand that economic models tell you whatever you may want to find, when Production is below par; a full employment economy never present, but necessary for economic accuracy in models. Don’t blame me–I don’t design these things! lgl

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