Skip to content


Why Did the ‘Stimulus’ Fail to Help the Economy?

William Anderson
Campaign For Liberty
Monday, January 25th, 2010

When Congress was debating President Obama’s proposed “stimulus” last year, two of the watchwords for the near-trillion-dollar boondoggle were “jobs” and “shovel-ready.” Now, given what comes out of Washington, one needs a shovel to clean up the muck, and I appreciate the politicians and the media telling us we needed to have our shovels ready.

Now that the numbers are in, however, it seems that money spent had no appreciable effect on lowering unemployment:

A federal spending surge of more than $20 billion for roads and bridges in President Barack Obama’s first stimulus has had no effect on local unemployment rates, raising questions about his argument for billions more to address an “urgent need to accelerate job growth.”

An Associated Press analysis of stimulus spending found that it didn’t matter if a lot of money was spent on highways or none at all: Local unemployment rates rose and fell regardless. And the stimulus spending only barely helped the beleaguered construction industry, the analysis showed.

Keynesians, not surprisingly, have an answer: The government did not spend enough. They reason that economic growth can occur only if “aggregate demand” is great enough to prevent an overall “glut” of unsold goods. (Like the mercantilists before them, Keynesians believe that recessions occur because businesses cannot sell all the goods they produce. Socialists similarly claim that workers are “unable to buy back the products” they make.)

Therefore if government is to prevent the recession-causing “glut,” it must spend whatever is necessary to cover any “shortfall” in private consumption and investment spending. Out of this “theory” we get the present “stimulus,” complete with the blessing of Ivy League economists (who seem to perform the role of the High Priests in today’s political economy).

Such a “theory,” however, is doomed to fail every time, and I wish to give some reasons why.

  • Individuals are purposeful creatures, so their spending also will reflect their own purposeful behavior. (It is interesting that many people who endorse the “aggregate demand” terminology also decry what they see as “mindless consumption of the masses.”)
  • The economy is not a blob into which one stirs in money the way one stirs in an ingredient into a cake. In other words, the economy does not have a “just add money” in a recipe. It is driven by people making purposeful decisions.
  • An economy has a structure of production that when working well directs resources, labor, and capital toward those areas of production that reflect the desires and needs of consumers.
  • When governments expand money through the central bank, the rush of new money distorts the production structure and changes the relative value of assets and factors of production. In the early stages of this government-inspired boom, the malinvested assets (the ones that become more valuable as a result of the artificial boom itself) expand relative to other assets.
  • The credit-fed boom ultimately cannot be sustained, and it becomes painfully clear that malinvested assets (see the housing-real estate bubble) quickly lose their value relative to other assets. This is the beginning of the recession, which is a period in which the economy begins to reassert the “consumer-preferred” value of economic assets.

Attempts to “stimulate” the economy through massive government spending may put money into the pockets of politically connected people, but it does nothing to restore the economic factors to their proper balances. Instead, the “stimulus” only serves to further distort the economic fundamentals and prolong the downturn.

That’s right. The stimulus has not staved off a major depression; instead, it has ensured the greater likelihood of a major economic collapse by keeping the factors unbalanced and distorting the structure of production.

The fact that the “elite” economists ignore (or even mock) what is known as the Austrian Theory of the Business Cycle does not change the fact that it explains why the Keynesian “solutions” are making things worse. Government can no more end a recession by pouring new money into the economy than one can end a fire by pouring on gasoline. But it can burn down our economic house.

View the original article at Campaign For Liberty

Related Posts with Thumbnails

Posted in Finance & Economics.

Tagged with , .

Support #altnews & keep Dark Politricks alive

Remember I told you over 5 years ago that they would be trying to shut down sites and YouTube channels that are not promoting the "Official" view. Well it's happening big time. Peoples Channels get no money from YouTube any more and Google is being fishy with their AdSense giving money for some clicks but not others. The time is here, it's not "Obama's Internet Cut Off Switch" it's "Trumps Sell Everyones Internet Dirty Laundry Garage Sale".

It's not just Google/YouTube defunding altenative chanels (mine was shut), but Facebook is also removing content, shutting pages, profiles and groups and removing funds from #altnews that way as well. I was recently kicked off FB and had a page "unpublished" with no reason given. If you don't know already all Facebooks Private Messages and Secret Groups are still analysed and checked for words related to drugs, sex, war etc against their own TOS. Personally IU know there are undercover Irish police moving from group to group cloning peoples accounts and getting people booted. Worse than that I know people in court at the moment for the content they had on their secret private group. Use Telegrams secret chat mode to chat on, or if you prefer if you need to or buy a dumb phone with nothing for the NSA to hack into if you are that paranoid.

So if your not supporting this site already which brings you news from the Left to the Right (really the same war mongering bollox) then I could do with some. Even if it's just £5 or tick the monthly subscription box it will be much appreciated. Read on to find out why/

Why?

Any support to keep this site would be appreciated. You could set up a monthly subscription for £2 like some people do or you could pay a one off donation as a gift.
I am not asking you to pay me for other people's articles, this is a clearing house as well as place to put my own views out into the world. I am asking for help to write more articles like my recent
false flag gas attack to get WWIII started in Syria, and Trump away from Putin. Hopefully a few missiles won't mean a WikiLeaks release of that infamous video Trump apparently made in a Russian bedroom with Prostitutes. Also please note that this article was written just an hour after the papers came out, and I always come back and update them.

If you want to read JUST my own articles then use the top menu I have written hundreds of articles for this site and I host numerous amounts of material that has seen me the victim of hacks, DOS plus I have been kicked off multiple hosting companies, free blogging sites, and I have even had threats to cease and desist from the US armed forces. Therefore I have to pay for my own server which is NOT cheap. The more people who read these article on this site the more it costs me so some support would be much appreciated.

I have backups of removed reports shown, then taken down after pressure, that show collusion between nations and the media. I have the full redacted 28/29 pages from the 9.11 commission on the site which seems to have been forgotten about as we help Saudi Arabia bomb Yemeni kids hiding in the rubble with white phosphorus, an illegal weaapon. One that the Israeli's even used when they bombed the UN compound in Gaza during Operation Cast Lead. We complain about Syrian troops (US Controlled ISIS) using chemical weapons to kill "beautiful babies". I suppose all those babies we kill in Iraq, Yemen, Somalia and Syria are just not beautiful enough for Trumps beautiful baby ratio. Plus we kill about 100 times as many as ISIS or the Syrian army have managed by a factor of about 1000 to 1.

I also have a backup of the FOX News series that looked into Israeli connections to 9.11. Obviously FOX removed that as soon as AIPAC, ADL and the rest of the Hasbra brigade protested.

I also have a copy of the the original Liberal Democrats Freedom Bill which was quickly and quietly removed from their site once they enacted and replaced with some watered down rubbish instead once they got into power. No change to police tactics, protesting or our unfair extradition treaty with the USA but we did get a stop to being clamped on private land instead of the mny great ideas in the original.

So ANY support to keep this site running would be much appreciated! I don't have much money after leaving my job and it is a choice between shutting the server or selling the domain or paying a lot of money just so I can show this material. Material like the FSB Bombings that put Putin in power or the Google no 1 spot when you search for protecting yourself from UK Police with "how to give a no comment interview". If you see any adverts that interest you then please visit them as it helps me without you even needing to give me any money. A few clicks per visit is all it takes to help keep the servers running and #altnews alive!

However if you don't want to use the very obvious and cost free ways (to you) to help the site and keep me writing for it then please consider making a small donation. Especially if you have a few quid sitting in your PayPal account doing nothing useful. Why not do a monthly subscription for less money instead. Will you really notice £5 a month?


0 Responses

Stay in touch with the conversation, subscribe to the RSS feed for comments on this post.



Some HTML is OK

or, reply to this post via trackback.



css.php