the "economic stimulus" package revisited

had another conversation recently with someone who just doesn't get why the government handing out a lot of money isn't a good way to stimulate the economy and, as i've had to have this conversation a lot lately (which surprises me although i guess it shouldn't), i've decided to spell it out for anybody who might happen to come by these parts:

1. you don't alleviate a debt crisis by increasing debt. see, if the u.s. were running surpluses right now (i.e., as we were before this president and his cronies got hold of the reins of power), it might make sense to rebate a portion of those excess funds to the people; but the point is, we're not running surpluses--we're broke as shit. so the only way the government can come up with the $150 billion to fund this package is to either (a) go out and borrow it, thus increasing our debt, or (b) go down in the basement and print more money. this is literally like charging a new outfit on a maxed-out credit card in order to make yourself feel better about being way over your head in debt.

2. this will ultimately hurt the very people it's supposed to help. Let’s take some poor schlub with an after-tax income of $20,000; we'll give him a rebate of $600--hooray! however, if inflation increases by 5% because of all the interest rate reductions, increase in national debt and injection of all those new dollars into the system, what said shlub doesn't realize is, he loses $1,030 in purchasing power. but all the shlub will remember come election time is all those nice politicians who gave him "free" money (or at least that's what they hope--this is, of course, why the democrats in the senate wanted to run up even more debt by extending the handout to non-taxpaying poor and old people--i.e., their voters--and why the republicans, realizing there was nothing in that for them, said "no way").

this isn't the way you stimulate the economy, folks--you stimulate the economy by encouraging savings and investment, which leads to job and wealth creation. if you focus on consumption, as our idiot leaders have chosen to do, you're gonna get nothing but currency debasement and creeping socialism.