Dems version of the stimulus package.

[kermit]

http://www.nytimes.com/2008/01/23/opinion/23wed1.html?hphttp://www.nytimes.com/2008/01/17/business/17fiscal.htmlDoes anyone here think that running up the deficit to give more money to the unemployed, increasing food stamps and medicaid, and cutting the amount of taxes to small businesses is going to do anything to the economy? Just because they will spend there money real fast means nothing. They aren't going to stimulate jobs, or provide any lasting economic growth or stability.

You do realize that the idea behind a stimulus package if for people to spend money real fast. This type of stimulation is analogous to turning the key to start a car. The starter motor has no effect on the running of the engine except that it is the stimulus that got it running. The more money you can put in the hands of those who will spend the money the more effective the stimulus will be. The people who are more likely to spend the money are people at lower incomes. For example, I am very middle class and if my wife and I get $800 each we plan to save half (the other half is buying me an LCD TV).

On the flip side stimulus packages are dangerous in that if they do not stimulate growth (as opposed to sustain growth) then thing will get worse. Also, the very existence of the package can hurt consumer and investor confidence and make things worse (this is what caused all the problems in Monday).

 

[Meshavrischika]

You do realize that the idea behind a stimulus package if for people to spend money real fast. This type of stimulation is analogous to turning the key to start a car. The starter motor has no effect on the running of the engine except that it is the stimulus that got it running. The more money you can put in the hands of those who will spend the money the more effective the stimulus will be. The people who are more likely to spend the money are people at lower incomes. For example, I am very middle class and if my wife and I get $800 each we plan to save half (the other half is buying me an LCD TV).

On the flip side stimulus packages are dangerous in that if they do not stimulate growth (as opposed to sustain growth) then thing will get worse. Also, the very existence of the package can hurt consumer and investor confidence and make things worse (this is what caused all the problems in Monday).

but is it really a long term kind of solution? or have we given up on those... (the government and the way it is run depresses me more every day)

 

[kermit]

but is it really a long term kind of solution? or have we given up on those... (the government and the way it is run depresses me more every day)

No, but is it not intended to be a long term solution. The idea is that it helps to stimulate sustainable long-term growth.

Look at it this way. I plan to buy a TV. Well a bunch of people will do the same (or other related products). This will cause an influx of cash into the company. Since companies want to minimize profits to avoid taxes they will spend that money on either labor or equipment which will in turn cause other companies to respond in a similar manner.

This method is the polar opposite of Reaganomics. Reaganomics (supply-side stimulation) puts more money in the hand of companies with the hope they will spend the money domestically (hardly a guarantee in an open economy like ours) to create growth. Consumer-side stimulation puts more money in the hands of consumers who will spend domestically. In this model companies are reacting to an increases in revenue rather a reduction in expenses.

I read an article a few months ago about the supply-side stimulous that was performed in the pharmaceutical industry over the last few years. Nearly every penny was spend overseas so that money was used to create economic growth, but the problem was that it wasn't our economy.

The question you have to ask yourself is to people have money to spend because they work for a company or does the companies employ people because people spend money? The answer is not obvious, and obviously the two statements are two side of the same coin. But from a economic standpoint the second statement carries more influence. The primary force drives economies is consumers not suppliers.

 

[Dannager]

So you're saying that knowledge is something that should only be had by those who can afford it?

Knowledge is something to be earned. If you want to be educated, you need to work at it.

Since when is knowledge a commodity?

Knowledge has always been a commodity.

And yes, the Amish do work, but, like you said, they don't work for any companies. They work for themselves. And yet no one makes a fuss about that. So why should anyone make a fuss about other people not working for companies?

If you produce something used in trade, you have a job. Even if they're self-employed, that's still a job.

 

[ElizabethVu]

What if they can't?

Tough.

True. But libraries don't usually have academic-level textbooks.

Boo hoo.

Do they actually sell the items that they farm, though? In most cases, they do not. So they're not actually contributing to the economy at all.

That doesn't make them any less farmers, though.

Why not? Are homeless people not just as capable of success as any other person is?

Sure...when they're not homeless.

Really? Then why are other countries able to offer state-sponsored higher education, and how is that state-sponsored higher education able to rank much higher than American higher education, in terms of quality?

I don't know, ask them.

 

[ElizabethVu]

You do realize that the idea behind a stimulus package if for people to spend money real fast. This type of stimulation is analogous to turning the key to start a car. The starter motor has no effect on the running of the engine except that it is the stimulus that got it running. The more money you can put in the hands of those who will spend the money the more effective the stimulus will be. The people who are more likely to spend the money are people at lower incomes. For example, I am very middle class and if my wife and I get $800 each we plan to save half (the other half is buying me an LCD TV).

We don't need spending, we need jobs. Money to lower income families and increasing food stamps does nothing of lasting value. If we're going to be spending a50 billion dollars, we should get some lasting value out of it.

 

[kermit]

We don't need spending, we need jobs.

Spending creates jobs. Why do you suppose companies add jobs? Do you think they say "hey, if we hire 100 people that will create economic growth that will help us grow more in the long run". No, they want economic growth but they are unwilling to put their necks on the line to do it. Companies add jobs in response to increased consumer spending on their goods or services.

Money to lower income families and increasing food stamps does nothing of lasting value.

Lower income families are more likely to spend the money increasing the effect of the stimulus.

If we're going to be spending a50 billion dollars, we should get some lasting value out of it.

The lasting effect will hopefully be economic growth well in excess of 50 billion. I said "hopefully" as this isn't sure bet.

It seems that the concept of a "stimulus" is escaping you. The economic cycle is a feedback loop that builds upon itself and shrinks upon itself. If you add an infusion of money into the loop you can reverse a shrinking trend. This is what happened when WWII started the government (the consumer) had to spend huge sums to build up the military. This influx of money kickstarted the economy and brought us out the Great Depression.

 

[Billnew]

but is it really a long term kind of solution? or have we given up on those... (the government and the way it is run depresses me more every day)

We have leaders running the country according to thier next election. Some 2 years is a long term goal, and others 4 yrs.

Dumping money on the poor will boost buying which will increase the demand on products. But I think the stimulus pacakge also gives money to business to help them to invest in the company. Thus aiding both sides of the equation.
(supply side and demand side.)
I had a thought,
In the olden days, when soceity hit an economic down turn, they could do little to affect it. Now we just give back more money.
So doesn't this mean that goverment takes to much in the first place?(even though this money is borrowed to
give it back.)

 

[Macano]

Quote:

Among the proposals circulating among Democrats are one-time tax rebates to almost all workers; temporary increases in unemployment benefits, food stamps and Medicaid payments; and federal grants to state and local governments.

ROFL. Please. You're killing me here!

 

[Meshavrischika]

We have leaders running the country according to thier next election. Some 2 years is a long term goal, and others 4 yrs.

Dumping money on the poor will boost buying which will increase the demand on products. But I think the stimulus pacakge also gives money to business to help them to invest in the company. Thus aiding both sides of the equation.
(supply side and demand side.)
I had a thought,
In the olden days, when soceity hit an economic down turn, they could do little to affect it. Now we just give back more money.
So doesn't this mean that goverment takes to much in the first place?(even though this money is borrowed to
give it back.)

yeah, it does mean that (but anyone who has eyes to see knows that already)