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In the U.S., according my unofficial totals gleaned from reading a wide variety of sources, we are now up to at least 1.5 trillion USD of "stimulus" provided to private enterprise and government agencies and at least 2 trillion USD created out of thin air by the Federal Reserve for the purposes of their finacial system recovery plan.
If you add that up and divide it by the approximately 300 million residents in the U.S., you get about 11,600 USD per person. I simply cannot understand how it would not have been better to write the checks out to each individual and let them spend or save it as they see fit. If they need a new car, that will get them a huge down payment on any reasonably-priced vehicle. If they need to catch up on mortgage payments, that should cover at least several months of payments on any reasonable dwelling in almost any city. If they have medical debts, this amount would help considerably for a lot of sick people. If they don't need to spend it, it will go into a bank or stock market account where it will reinject capital into the financial system.
Will someone, anyone, PLEASE tell me why this isn't a better way to spend U.S. "stimulus" money?!...

Why we have such a large group in positions of influence who are bereft of any feelings of empathy for those in need is something for social scientists or philosophers to ponder.

I've pondered it quite a bit, though I'm neither social scientist nor philosopher. I have found some illuminating insights into this issue in the areas of medicine and psychology. I invite anyone who is interested in such an approach to this problem to google the word "ponerology" and follow the research where it leads you.

Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it is the only thing that ever has. -Margaret Mead

by blueneck on Sat Feb 28th, 2009 at 03:23:34 PM EST
... wasted in the first stage of the bail-out ...

... because, after all, welfare for the rich is less effective as stimulus than welfare for everybody.

However, there is no $1.5b in stimulus. The TARP money was not stimulus, it was a financial bail-out. It ought to have been intended to prevent a complete collapse of the finance sector and assist the restructuring of the finance sector from egregiously expensive and grossly inefficient master of the productive and household sectors to a regulated utility providing essential services to the productive and household sector.

And of course because it was instead mostly spent trying to uncrack the broken eggs, the first half was mostly wasted, and much but not all of the second half will be wasted.

The Fed creation of money and playing 1990's commercial banking games with the national monetary authority ... that's also part of that same unholy mess.

The Stimulus is the $500b in government spending over 2 and a half years, or in other words $200b a year ... less than half the GDP accounts value for the cost of Federal defense spending.

As far as why the $200b a year should not be distributed on a per person basis ... because then we would get less stimulus per dollar added to the national debt to be serviced.

As to whether the $700b from the TARP would not be better distributed on a per person basis ... I just don't know. I wouldn't be surprised if the impact of handing the TARP money out to each person to either retire a debt or to establish a medium term (say, minimum three years) income earning deposit might not have more effectively directed the bail out to those financial institutions that are of some use to ordinary people.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Sat Feb 28th, 2009 at 03:45:08 PM EST
[ Parent ]
jsut a note to point out that i did place the word stimulus in scare quotes, as a catch-all word, in my original comment, though your analysis still stands.

By some estimates, the "lost" monies in CDO's, CDS's or whatever alphabet soup acronyms are being used range well up into the 10's of trillions of USD, so I am not really surprised that two or three trillion of giveaways to the financial sector has not improved the situation of the high finance system much, if at all. For Joe The Plumber, the money given to him directly would certainly decrease his reliance on the financial sector at least temporarily and give the REAL economy a much-needed jumpstart.

I do see the merit in your suggested modification of a direct payment to individuals to be used to retire a debt or establish a new investment. I do believe that would be a better use of financial bailout funds as opposed to what happened with the first TARP monies, and possibily the rest of them, too.  So, split the 11,600 USD for each individual in half.  One half for such a program, the other half left to individual discretion for use in the automobile/healthcare/foreclosure/etc crises. Do you think that would work?

I'm no economist, just an observer, so I realize that my simplification may not be the most nearly correct way of approaching the gargantuan problem we see. My plea for explanation is real, and thus I appreciate and thank you for your reply.

Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it is the only thing that ever has. -Margaret Mead

by blueneck on Sat Feb 28th, 2009 at 05:18:26 PM EST
[ Parent ]
I did leave out the $200b or so of tax cuts ... but apart from the tax cuts that were originally promised before the full extent of the economic crisis became clear, the rest were just the political cost of the obsolete institution of the filibuster and of the PAYGO legislation (which was obsolete on passage).

The magnitude of the borrowing with "hoped for recovery" does show the challenge in getting actual stimulus done.

As to why the stimulus spending should be government spending rather than private spending ... we live in an economy where 2.2% of spending on GDP is federal government, non-defense spending, and 70% of spending on GDP is consumption spending. IOW, as JK Galbraith pointed out long ago, an economy of private affluence and public poverty. For a large number of the actual stimulus spending programs, the long term payoff really is substantial.

And it is really important for the US government to get back to the Hamiltonian system which served us reasonably well from 1790 to 1970 of the government investing in infrastructure that would support the development of new industry. Gaining the ability to do new things, and the ability to do the things we are presently doing better, is quite urgent, after a decade of reversing course and over two decades of heading rapidly in the wrong direction.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Sat Feb 28th, 2009 at 05:40:52 PM EST
[ Parent ]
Thanks for the reply. You do make sense, and I actually agree with much of your analysis.  However, it is still difficult to understand.  I guess, as is usually the case, most simple answers don't prove to be completely correct.

Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it is the only thing that ever has. -Margaret Mead
by blueneck on Sun Mar 1st, 2009 at 12:41:26 AM EST
[ Parent ]
... confuse matters for political ends, and the normal media often (+) just reports them as part of the mix in their "he said / she said" style of reporting. "Concerns have been raised ...", when just a little research will show that the 'concerns' are simply political noise to create doubt and confusion and nothing more.

(+ not invariably, though ... I did enjoy seeing a Republican Congressman trying to push the "$8b for Harry Reid's magnetic levitation train from Disneyland to Sin City" line and get smacked down by the television reporter asking "questions" along the lines of, "isn't that just untrue? There is a list of designated high speed rail corridors and that line is not on the list.")


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Sun Mar 1st, 2009 at 10:40:08 AM EST
[ Parent ]

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