We built our robust economy on credit. Ever since we went off the gold standard under Nixon we've been printing money like crazy, building our economy on debt. Our collateral has been the capacity of American workers and enterprise. You wouldn't get a loan youself on such collateral but that's what our economy is based on. There are a couple of really bad consequences.
First, it's really, really hard to fix this problem because so much of our country's economy is based on debt. There's so much debt that pumping billions, even trillions, into it barely makes a dent in the underlying problem.
Second, the only ways to fix it seem to be printing more money or just paying down ALL debt and letting the economy go through the pain of a recovery which involves a lot of corporate insolvency.
We're trying to fix it by printing money because the alternative SEEMS worse. That's basically what these bailouts are ... printing more money and then propping up the dollar with loans from other countries. Did you know that just since September 2008 we've printed twice as much money as ever before? That drives down the value of the dollar really fast and adds mind-boggling amounts of debt we owe other countries. We're mortgaging our country to the hilt ... and beyond. It will create a huge inflationary bubble too. Most Americans don't or choose not to remember what it was like when basic interest rates were around 20% making EVERYTHING cost way more than we could afford. Inflation drives up the cost of everything and makes simple living difficult.
The alternative way of fixing this is soooo painful but will probably be better for us in the long run. We need to give up our 'standard of living' for a while and decrease our debt substantially (at the individual, business and gov't levels) and have it tough for that time rather than creating misery for half a century or more via this stimulus package.
Many Americans don't understand that most of this current stimulus package is not stimulus at all. Instead, most of it is pet Democratic causes and they're using this emergency as an excuse to get them through Congress because they couldn't get them passed otherwise! Did you know that it now includes a huge amount of NEW entitlements that we'll have to keep paying for long after this crisis is over? Do you think this is a good time to institute new entitlements? In fact it's stupid! Speaker Pelosi and President Obama promised that this package would be targeted, temporary and quickly effective. It is none of those things now. It's a shameful, dishonest sham being perpetrated on citizens.
Either way we attack this (through dramatically increased government spending or via capitalistic measures like fiscal responsibility) businesses suffer. If you think that these bailouts will fix it, think again. Businesses will fail at scary rates for at least a year or two whether it's from inflation (ie, printing money) driving their sales down or Americans making paying down all debt their priority instead of buying more 'stuff'.
If you think there's a painless solution to this you're being unrealistic. The painful but true fact is this will be worse than most of us think and I think this so-called stimulus package is a really bad idea, at least as it's currently set up. Encouraging capitalism will be better than just handing people money. And all the new funding for Democratic party special projects just adds to the problem, not fix it. We need ALL the money we can muster to help grow businesses so they can create jobs. The last thing we need is more gov't spending on projects (that CAN wait) and have to get funded by sucking money out of the economy and adding debt. Isn't it clear how stupid it is to do that?
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