Abolish The Federal Reserve - themaestrosrep.org

Isn’t it awesome that the government can fix any problem that can possibly occur, and at any time set the economy on track with a stimulus package?

However, since the government can easily set up our economic future, our stimulus package goals are starting to seem a little modest.

Hopefully it’s not too late for the Senate to address this.  Here are some recommendations:

Since we don’t want to have nothing to aspire to, or to taint the American reputation for frugal modesty, the poorest person in America should have only two cars– a workhorse car, and a backup.  I’d suggest a Toyota Prius and a Corvette.

The housing for the poorest person in America should be a two or three bedroom condo with three or four HiDef TV’s, a Nintendo Wii or a Stairmaster (depending on individual results for the fast food portion of the survey mandated by the Full Housing Act Really This Time– the acronym for which may be congressional thoughtfulness appropriate, but here redacted), a front porch, a shared swimming pool (with good filtration in case a rich person tries to sneak up and pee in it), and of course a two car garage to protect the poor person cars from the elements.

The richest person in America should be capped out at a Mercedes hovercraft, one personal jet, and a perpetual motion machine.  (If the rich need a helicopter, they can borrow Ben Bernanke’s).  Al Gore’s house should do as the top-level rich person house in America (although perhaps we should give an option to choose John Edwards’ house– since this is a freedom loving democracy– a rich person should have a choice).

Now that the broad strokes of this economy boosting plan have been laid out, comes the easy part: the Federal Reserve, the President’s Council of Economic Advisers and the banking industry fill in the details, Congress votes on the plan and helpfully attaches some pork, and countless federal bureaucracies spring in to action to add the finer details on top of the fine details and stir.

The rest of us sit back and wait (since elected reps couldn’t expect to get our votes if they expect us to do anything else).

If my economic stimulus plan is starting to seem a little absurd to you, congratulations– you’re not qualified to be the President of the United States, a member of Congress, or a U.S. government economist.  Sorry, but you may or may not still be qualified to be poor.

Some may agree that there’s a lot of fiscal stimulus magic thinking going on, but nevertheless think that having a package creates some activity and maybe some hope, so if we’re lucky that’s what we net while the redistribution itself is a wash.

That’s not much less of a fantasy.

For one thing, moving resources from point A to point B in itself costs resources.

Second, what economic actors need is accurate information and continuity for decision making, not smoke and mirrors. The smoke and mirrors have long term consequences that short term stimulus (assuming it actually works at all) can’t overcome.

Finally, I was interested to see a step-by-step analysis of the net result of the fiscal stimulus from mutual fund manager John Hussman.  He predicts that only a small portion of the fiscal stimulus rebates will end up directed toward consumption (similar to the last rebate, where more went to paying down private debt), and that little of the government debt created can possibly be monetized.  The result is that, “In the end, the U.S. economy will carry a larger amount of U.S. Treasury debt, and a somewhat smaller amount of mortgage and credit card debt than it would have in the absence of the fiscal stimulus.”

In view of the plunging U.S. dollar, it would seem that it’s not only Ma and Pa Consumer’s debt that’s attracting questions out in the economy– U.S. Government debt might be under the microscope too.

Whose credit rating is more important to America’s economic future?

From that perspective, fiscal stimulus looks like a big mistake.

By Les Lafave

Abolish The Federal Reserve – themaestrosrep.org