Stimulus redux
 

As we approach the first anniversary of the stimulus bill, I have noticed that I haven't heard the word "multiplier" (in its Keynesian context) in many months.

There were a bunch of people posting here that were big advocates of this type of intervention. I am curious to hear if, after a year, you've changed your minds on this subject, liked what you've seen, or what?

In the interests of full disclosure--I thought it was a bad idea then and my opinion has not changed.

WW

The stimulus was a) misdirected (not weighted enough towards job growth), and b) too small by about 400-500 million.

You seriously advocate that no stimulus was necessary? Economists both left and right would disagree, one year on. Mind you, I felt that both TARP and the stimulus were utterly repulsive, but unfortunately necessary.

I agree completely. The stimulus, plus your 400-500 million should have been directed towards a tax cut or holiday.

The stimulus was not necessary. I'll say it. But that is my opinion. Instead of giving that money away to under performers out there, it should have occurred in the form of tax cuts for the next few years. Tax cuts always spur economic growth, period. It is a tried and true formula. This stimulus just puts money (that is actually just created out of thin air) and thus represents little to no actual value into the hands of under performing companies - in the end, it will just cause them to continue to under perform, unless the executives are cleaned out with a new set - and even then you run the risk of another inept group.

Thanks for replying--I thought this thread had died a quick death.

There is so much ground to cover here and I don't want this reply to be diffuse, so I will will keep this tight. The stimulus, as a centrally directed redistribution of capital, was inherently inefficient and futile. It didn't work, couldn't work, and won't work if done again.

There are lots of things the government could have done to help--all of which involve reducing the federal presence in the people's economic lives.

WW

Amen and Amen

We have covered this ground before and it was one of the worst periods of our economic history. Eight years of "stimulus" left nothing to show but a huge debt:



"Henry Morgenthau, Jr. was FDR's Secretary of the Treasury from 1934-1945. In the following important quote, he admits that the big New Deal stimulus spending programs had failed.



(p. 2) We have tried spending money. We are spending more money than we have ever spent before and it does not work. And I have just one interest, and if I am wrong . . . somebody else can have my job. I want to see this country prosperous. I want to see people get a job, I want to see people get enough to eat. We have never made good on our promises. . . . I say after eight years of this administration we have just as much unemployment as when we started . . . . And an enormous debt to boot!



Source:

Folsom, Burton W., Jr. In New Deal or Raw Deal? How FDR's Economic Legacy Has Damaged America. 4th ed. New York: Threshold Editions, 2008.

(Note: ellipses in Folsum's version of the quotation.)




Folsum says that this statement was from testimony before the House Ways and Means Committee in May 1939; and can be found in Morgenthau's Diary entry for May 9, 1939 at the Roosevelt Presidential Library. "



The secrecy and refusal to reveal the how much and to whom surrounding the current wave of "stimulus" will be viewed as one of the darker eras of our country by future historians.

The actions of the FDR administration prolonged the depression, and we are going to see a parallel effect with the current actions. The difference being that today's crisis involves a more global outcome with much more widespread fallout, much of which has yet to occur.

My Grandmother, God bless her... has been and is still a firm FDR supporter. Hoover is the devil.

Keynesian economics are more about control than action, bribing people with their own money.