Monday, February 23, 2009

It's starting...

While President Obama falsely accused the Republicans who opposed his stimulus plan as wanting to do nothing, back in January, I actually stated the case for "doing nothing". (actually, I stated the case that doing nothing was better than what he and the Democrats were proposing at the time - and have since rammed through congress at breakneck speed - there are things that are better than nothing, but this is not it).

To this point, we have had rising unemployment, but at least, inflation was low - in fact prices were dropping - that's how the market compensates - and recovers on it's own. Prices can drop to the point that people start buying which in turn gets things going again.

Now that the government has thrown another $800 Billion out there - but for which there were no goods and services produced, this gives us a greater supply of dollars, but the same supply of goods and services. Now that dollars are in greater supply relative to the goods they would purchase, we can expect with certainty that those dollars will be worth LESS relative to the goods they would purchase. In short, this is exactly what inflation is.

To make things worse, since no extra goods and services are being produced to go along with the extra currency, this does nothing to change the rise in unemployment. So now, we not only have people continuing to lose jobs, they will now find that the money they have saved for emergencies like this will buy less food, heat, gas, clothes, etc than it did before. Doing nothing would have been far better than this abomination from the Democrats.

Well - that inflation is starting now and I fear that the "stimulus" bill may have killed any chance for any sort of speedy recovery.

3 comments:

  1. Yes, but the Chinese need some place to put all that currency of theirs. Loan it to the U.S. government and then see what we have to say about human rights.

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  2. That's pretty much why Hillary has been paling around over there for the past week or two.

    I'll bet China will be real happy when the US starts printing off money to pay back them back. Nothing like lending a dollar & then getting one back that's worth only 60-75% of its original value.

    As far as human rights go, it seems China's been getting pretty much a free pass on that (as has just about everyone else) while the world condemns us for Gitmo & Israel for defending itself.

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  3. That is because all the world "knows" that we are evil. All we want is the worlds oil. Can't you see it with Iraq in mind. We pay billions of dollars fighting the war there. Leave as soon as we stabilized things. Get nothing back financially from it (except the strain on our finances). That should prove we only wanted to own the oil - right?

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