Stimulus Goals: What are the true causes and effects?

This from RealClearPolitics:

“White House press secretary Jay Carney says the Recovery Act added several million jobs and lowered the unemployment rate. According to Carney, the “goals” of the stimulus package “have been met.”

A reporter asked Carney why unemployment is at 9% and not 7%, the percentage projected if the stimulus worked. Carney dismissed the question. “We’ve said repeatedly that we don’t want to relitigate the battles of the past,” Carney told the reporter.”

But was it the act that added the jobs and lowered the unemployment rate? And if it was is it sustainable?

In order for the politicians in Washington to keep being elected, they have to convince the majority of Americans that they are “doing something”. What exactly they are doing doesn’t matter as long as the results happen. Now some may say that this is good because the results that are all that matter. But would we say the same thing about President George W. Bush running his 2004 campaign on the highest home ownership rate in the history of the United States?

Of course, now we see that it was a bubble that ended up making many Americans bankrupt. So how do we know, again assuming the government stimulus did work, that it too did not also create a bubble that will burst in the face of Barack Obama and Mr. Carney?

The arrogance of politics is that anything a President or Congress does while it is in office makes for whatever the best results in the economy are. Imagine that the boost in GDP and the lowering of unemployment was because of new technological innovation or that the country’s rich saved more money for investment and invested in new business, how would that have anything to do with building new roads by the stimulus?

It wouldn’t.

The American people must wake up first to the fact that politicians cannot create jobs. All they can do is shift valuable labor and materials to a different sector of the economy. That means that more labor and materials are being put in an industry that it would’t be in if it wasn’t for the government entering the market and bidding up the price.

So what are we losing for those falsely allocated materials and labor?

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Published in: on February 17, 2011 at 11:03 pm  Leave a Comment  
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The Harding Way by Thomas E Woods Jr.

Today’s article of the day comes from The American Conservative:

When Barack Obama urged passage of his so-called stimulus measure in February, he claimed that only bold government action would prevent the economy from slipping into a deep depression. In making that argument, he was only repeating the conventional wisdom, according to which markets are not self-correcting—except in the very long run—and state intervention is necessary to revive economic activity.

Economic theory can tell us why these claims are incorrect and why, in fact, even the appearance of prosperity that those measures can produce causes still greater damage and leads to a more severe correction in the long run. But we can also refer to the testimony of history. In particular, the depression of 1920-21, which most people have never heard of, is an example of the resumption of prosperity in the absence of government stimulus, indeed in the face of its very opposite. If economies cannot turn around without these interventions, then what happened in this instance should not have been possible. But it was.

During and after World War I, the Federal Reserve inflated the money supply substantially. Once the Fed finally began to raise the discount rate—the rate at which it lends to banks—the economy slowed as it started readjusting to reality. By the middle of 1920, the downturn had become severe, with production falling by 21 percent over the next 12 months. The number of unemployed people jumped from 2.1 million in 1920 to 4.9 million in 1921.

From 1929 onward, Herbert Hoover and then Franklin Roosevelt tried to fight an economic depression by making labor costlier to hire. Warren G. Harding, on the other hand, said in the 1920 acceptance speech he delivered upon receiving the Republican nomination, “I would be blind to the responsibilities that mark this fateful hour if I did not caution the wage-earners of America that mounting wages and decreased production can lead only to industrial and economic ruin.” Harding elsewhere explained that wages, like prices, would need to come down to reflect post-bubble economic realities.

Few American presidents are less in fashion among historians than Harding, who is routinely portrayed as a bumbling fool who stumbled into the presidency. Yet whatever his intellectual shortcomings—and they have been grotesquely exaggerated, as recent scholars have admitted—and whatever the moral foibles that afflicted him, he understood the fundamentals of boom, bust, and recovery better than any 20th-century president. (more…)

Economic Recovery: Are we there yet?

matson1

~PCCapitalist

Published in: on March 30, 2009 at 12:12 pm  Leave a Comment  
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20/20 Bailout Special Featuring Mason Economics

Okay, not quite but one of my best professors, Dr. Peter Leeson, is featured on the below video at around 3:45. This is just the first part of the series. I urge everyone to watch the program in its entirety.

~PCCapitalist

Published in: on March 15, 2009 at 9:10 pm  Leave a Comment  
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Something to look forward in our journey towards Socialism

From Reuters:

“A Berlin cashier who was sacked from a supermarket after 31 years of service because her employer accused her of stealing 1.30 euros ($1.65) has become a flash point of a debate about unchecked capitalism in Germany.

Leaders of Germany’s major political parties criticized the supermarket’s decision to fire Barbara Emme, especially because the 50-year-old who has become a German cause celebre denies the charges that she kept bottle deposit receipts worth 1.30 euros.

Wolfgang Thierse, vice president of parliament and member of the Social Democrats, on Thursday called a court decision on Tuesday that upheld the cashier’s sacking “barbaric” and warned cases like this “destroy people’s confidence in democracy.”

Horst Seehofer, leader of the Christian Social Union, said the case raised questions about capitalism, which has come under attack in Germany in the wake of the global financial crisis.

“I don’t understand how a cashier can be fired because of 1.30 euros while managers who lose billions of euros can keep their jobs,” Seehofer told a rally in Bavaria on Wednesday.”

This is the socialist nanny-state at it’s best. First, we have people getting upset about someone getting fired. Like it is any of their business. Second, the cashier got fired for stealing but that person is being defended because the managers of corporations are losing money. We are not saying it is social justice to steal from your employer. If America continues the policy of bailing people out and believing that it is your right to a house, car, job, healthcare, retirement insurance etc. this is where we will end up.

~Marxsevelt

Published in: on March 1, 2009 at 8:20 pm  Leave a Comment  
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Senator Jim DeMint on Bailouts and Inflation

Via NetRightNation Jim Demint at CPAC mentions the upcoming inflation around 2:30:

~PCCapitalist

Published in: on February 28, 2009 at 3:20 pm  Leave a Comment  
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Stimulate this…

Great post by Dr. Russell Roberts over at Cafe Hayek:

“On the same day the Washington Post reports the passing of a $790 billion spending package that includes about $50 billion for so-called infrastructure, it also reports on a Department of Transportation audit of spending on roads:

Design and engineering companies helping to build the nation’s highways ran up millions of dollars in inappropriate charges at the expense of taxpayers, including bills for parties, luxury car leases and hefty paychecks for executives, according to auditors.

Among the “unallowable expenses” singled out:

$355,767 to pay the personal income taxes of executives.

$301,667 to lease 45 automobiles,

including Mercedes, BMW and other luxury brands.

$247,685 for dinners, tickets to sporting events, theme-holiday parties.

$60,000 paid to a consultant with only a verbal agreement.

$35,352 charged by two firms for “image-enhancing items such as golf shirts.”

The Transportation Department audit, which took four years, examined bills from a sampling of 41 design and engineering firms picked from 3,580 firms that had active contracts with state departments of transportation. Auditors looked at data from 2003 because it was the most current year available when the review began.”

~PCCapitalist

The People’s Stimulus: Get Your Money Back

I usually do not post videos but this this one is too good and I may possibly be getting more out of it then most. First, I found it funny that the guy made a case for the government to have his money and then he said he could spend it better. The second thing, the part that I thought of, is that even these huge Obama supporters like this idea. This is how bad the Republican party is about getting out their message. When a person with a camera can convince people tax cuts are good but a politician with the media and staff cannot. Now of course I know it is too late and that it isn’t an election year and therefore Republican won’t do it but they should at least try.

~PCCapitalist

Published in: on February 13, 2009 at 1:42 pm  Comments (1)  
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