Suprise Suprise, the US Fiscal Stimulus is a Failure
June 8, 2009 · By Greg Farries
Dick Morris points out a sobering truth about the failure of “stimulus” economics:
Here are the details. In April, personal household, inflation-adjusted income rose by $122 billion. Of that increase, one-third or $44 billion came from the government’s stimulus program. But while personal income was rising, household savings (which includes paying down credit card balances, mortgages, student loans, car loans, etc) rose by $132 billion — $10 billion more than the rise in income. So personal consumption dropped 0.1%.
The stimulus package was a total and complete failure. As predicted, as happened with Bush’s 2008 tax cut, as happened with the Japanese stimulus packages of the 90s, fearful consumers sat on their money and wouldn’t spend it. Keynesian economics didn’t work. Again.
The economic situation in Canada is not likely to be much better.
John H. Cochrane writing at the economist.com:
There is little empirical evidence to suggest that stimulus will work either. Empirical work without a plausible mechanism is always suspect, and work here suffers desperately from the correlation problem. Quack medicine seems to work, because people take it when they are sick. We do know three things. First, countries that borrow a lot and spend a lot do not grow quickly. Second, we have had credit crunches periodically for centuries, and most have passed quickly without stimulus. Whether the long duration of the great depression was caused or helped by stimulus is still hotly debated. Third, many crises have been precipitated by too much government borrowing.
and once again government intervention acts as the perfect lagging indicator for a recovering economy. back in the 90′s stimulus measures came out while the economy was already on the upswing. this appears to be no different. but now thanks to overspending on these measures we now have to deal with the very real probability of inflation, or for the US, hyperinflation. good job guys!!!
in an economy there is a finite amount of money in circulation. it will be liberated into the economy when the purchaser feels that the price and the time is right. government intervention does nothing but keep prices inflated and therefore keeps private money on the sidelines. nothing gained but much lost. keynes…….you suck.
The tack toward Keynes is the main reason behind the recent drop in the polls for the CPC, if you ask me.
Who’s surprised that Keynes is failing? Nobody with a clue.
This entire stimulus/bailout scheme was a preordained disaster from the moment it first popped into the head of some intellectually challenged member of the government. (Both American & Canadian) Giving any elected official the opportunity to squander taxpayer’s money is like turning an alcoholic loose in a winery. They lose all control.