are fiscal stimulus really necessary

[morganist]

i was just thinking about the fiscal stimulus and thought is it really necessary.

if you think about it it has been done to meet inflation targets. they have deflation and need to plug the deflationary gap. so my point being is it really that bad to have deflation some a short period. it means there is a problem in the free market and the government has stepped in. however if the free market was left alone like in previous times it would progress and recover. the point being which is worse the consequences of deflation for a short or medium term or government debt for a medium to long term.

also why does the inflation target have to be meet does it even matter at all. if you think about it why is it two and a half percent and why is that a magic number. each year if we hit that target if there is only one or two years of deflation at two to three percent you are only back where you were two years before. so why is it worse to back track two years than it is to have debt for twenty or thirty.

what do you think. is there logic here.

 

[Index piker]

No, it's detrimental to the US as a whole but a great vote buying opportunity for senators , representatives .


What do you expect out of a bill that was generated by asking all congressmen and reps (of the correct party) to send in a wish list of pet projects.


Also don't be fooled into thinking it's full of repairing infrastructure , building schools etc.

 

[morganist]

Quote from Index piker:

No, it's detrimental to the US as a whole but a great vote buying opportunity for senators , representatives .


What do you expect out of a bill that was generated by asking all congressmen and reps (of the correct party) to send in a wish list of pet projects.


Also don't be fooled into thinking it's full of repairing infrastructure , building schools etc.

does anyone know what it actually consists of.

 

[Free Thinker]

Quote from morganist:

i was just thinking about the fiscal stimulus and thought is it really necessary.

if you think about it it has been done to meet inflation targets. they have deflation and need to plug the deflationary gap. so my point being is it really that bad to have deflation some a short period. it means there is a problem in the free market and the government has stepped in. however if the free market was left alone like in previous times it would progress and recover. the point being which is worse the consequences of deflation for a short or medium term or government debt for a medium to long term.

also why does the inflation target have to be meet does it even matter at all. if you think about it why is it two and a half percent and why is that a magic number. each year if we hit that target if there is only one or two years of deflation at two to three percent you are only back where you were two years before. so why is it worse to back track two years than it is to have debt for twenty or thirty.

what do you think. is there logic here.

deflation is fatal to a heavily indebted country and its people.

 

[Index piker]

Quote from morganist:

does anyone know what it actually consists of.

This will get you started.
http://online.wsj.com/article/SB123202946622485595.html

 

[truehawk]

Go to http://www.Recovery.gov

I don't think that it is at all detrimental, but slow.
It is in fact a patchwork of everything imaginable, only 1/4 of the money has been spent, and about half of the grants have not yet been awarded.

 

[Scataphagos]

Quote from morganist:

does anyone know what it actually consists of.

What are you asking...?

1. What is "stimulus" being spent upon currently, or

2. What is "stimulus" in general?

 

[morganist]

Quote from Scataphagos:

What are you asking...?

1. What is "stimulus" being spent upon currently, or

2. What is "stimulus" in general?

what is the stimulus being spent on.

 

[truehawk]

Quote from morganist:

i was just thinking about the fiscal stimulus and thought is it really necessary.

Also after the civil war, when we were on the gold standard, we had 40 years of deflation.

There are are also several schools of thought about stimulus. The railroads, power utilities, aircraft and airports, computer chip technology, gene therapy, antibiotics, interstate highways, etc are all the result of past government spending ie "stimulus". Stimulus invested in intellectual capital and infrastructure has a positive return on investments.

There is another school of thought that any government investment is "busywork". For some economics is not about what makes money for the country but what what allows a few to make the most money.

 

[Index piker]

Quote from truehawk:

Quote from morganist:

i was just thinking about the fiscal stimulus and thought is it really necessary.

Also after the civil war, when we were on the gold standard, we had 40 years of deflation.



There is another school of thought that any government investment is "busywork".

It might not be exclusively busywork but it comes directly at the expense of private capital.

Private capital has the hurdle of needing to create wealth to justify it's continuation.

govt has no such hurdle as a matter of fact the worse the results the program or entity performs justfies throwing more money at it , (sec madoff failure, gm loans bailouts , stimulus 1, 2 : fannie freddie,), or it's justified as a vote buying program for politicians.

Economic productivity plays NO PART in a govt program ( concerning it's continuation or deletion).