It might not be morning again in America but Bush hopes to wake up the economy via his Economic Stimulus Act of 2008. The stimulant – pumping more than $152 billion (or about 1% GDP) into the economy via tax rebate cheques – will start arriving in the mailboxes of Americans over the next three weeks.
The plans proponents are optimistic. Hank Paulson, in a speech confirming that no second stimulus plan would be undertaken, believes the $152-billion stimulus plan could create 500,000 jobs this year. Americans would have to spend their money wisely for the plan to have maximum impact. But what if the rebate money is already owed?
“I was unemployed for about three months recently and I have to use my tax rebate for my past due bills that accumulated during that time,” Bethany Gealy responded to a Review-Journal online poll. “If there is anything left, I will buy some stuff for the house and maybe go out to dinner. Also, maybe buy some clothes.
A very unscientific poll on cashmoneylife.com seems to bear this theme out, with those planning to ‘reduce debt’ outnumbering others. One wonders whether ‘Invest it or Save it’ would really help the economy or just go to prop up failing banks and hedge funds for a few weeks more.
Even if consumers go out and spend their cheques quickly and completely it is hard to imagine the job growth Paulson hopes for. Goldman Sachs has just put toghether a list of stocks that stand to benefit from the supposed consumer munificence – and most of these companies have become what they are through the mass importation of Chinese goods to sell at cut rates in big box stores across the US. Walmart, Costco and Best-buy are all here (oddly the Cheesecake Factory is 1st on this list). Apart from not helping America’s precipitious trade imbalance with China, these companies are commonly accused of providing ‘McJobs’ – or jobs that are unproductive and produce very little knock-on benefit to the economy.
Our friend Max Kaiser has the most adventurous plan of all: Don’t spend it!
If you work for wages (or live on a pension), consider this, if every American said, “No thank you” to Bush’s stimulus check and refused to cash them, the value of the dollars in your pocket right now, in terms of their purchasing power would go up by a factor greater than the face value ($600) of the stimulus check. In other words, if you didn’t spend these checks, you’d be the richer for it.
Every dollar spent adds debt and spawns more fiat currency issuance which has the effect of decreasing the purchasing power of the U.S. dollars in your pocket. Bush tries to make up the difference by borrowing even more; borrowing 340 million a day to fund the war and close to 3 billion a day to cover U.S. operating expenses, not to mention Wall Street borrowing over $30 billion a day to keep their Ponzi scheme going. All this borrowing keeps alive the vicious financial spiral trending lower towards permanent currency debasement and possible sovereignty loss.
So is it time to make a KLF-style assault on the increasing money supply? No, there is a much better plan (besides that only works if everyone does it – and that has the odds of a prisoners dilemma with a few hundred million participants)
In a year or so, after 99.999% of
America has cashed their stimulus
check, any checks that have not
been cashed will accrue value as collector’s items.
