Government Rebate Checks?

I am sorry to bore you with more economic mumbo jumbo, but unfortunately this mumbo jumbo is of the utmost importance in everyone’s life. I had to weigh in on the planned economic stimulus package that the White House and Congress are proposing to help boost the economy.

The first thing that I want to note is that this plan and its urgency is definitely an acknowledgement that there is serious trouble in the economy. However, it’s not the first economic rebate in recent years, as there was a similar rebate back in 2001, to help jump start the economy. The economic issues are a lot different from then, however, but in a bad way.

Secondly, one of the big problems with this rebate concept is born from the fact that so much production has been off shored from America. What is the net effect upon our economy if American consumers rush out and spend their rebate checks, like is hoped, yet they spend it all on goods made in China or some other foreign nation? How would it help the American economy to increase production and jobs in China, Japan or elsewhere? They get the production, jobs and income and in return we grow deeper in debt.

Thirdly, where is the money going to come from to pay for this, given that we are trillions of dollars in debt as a nation (government)? A government in debt and using its tax revenues to give to consumers, who are also in debt, more money to buy foreign produced goods, is not a smart move. It’s akin to giving a heroin addict, who is starting to sweat and quiver from withdrawal, more dope in order to make him or her feel better. However, feeling better is not always getting better. Many things that feel good to you are not good for you and can actually hurt you, especially when it takes more and more dope to experience the same high we got from less dope in the past.

Finally, the psychology of the consumer is not going to be manipulated so easily this time around, as during the last rebate. Most people have finally caught on that something is wrong…..in a different kind of way. In fact, many people may simply use that money to pay down debt or attempt to save it in preparation for hard times. It’s only an assumption that this rebate will lead to new spending and spending on American made goods and or services that could help stimulate the economy.

For every action there is a reaction. In other words, for every action there is a consequence or trade off. America is selling away its future in order to buy a better present. The pleasure of today will be offset or paid for with pain tomorrow. Everything is short term oriented when existence is a long term proposition, if not reality. Our economy was doped up on easy credit (debt) that gave us a high and masks our loss of market share of global GDP and a decline in our standard of living. As long as the economy is doped up with liquidity shot up our economic veins, we can continue to function.

The quagmire for the nation now is that we face the risk of overdosing because we do not want to go through the tough withdrawal symptoms (deep recession) that would allows us to stabilize our health, after we hit bottom. Politicians and politics don’t want to go through withdrawal under their leadership, as they are sure to be blamed for all the pain and suffering, which will cost them dearly in future elections. Thus, politics is interfering with economic as sometimes it requires a step back before one can take steps forward again. Politics, from both sides, keeps us doped up because when we feel good, politicians feel secure in their power, when were feeling bad, they feel insecure. Thus, they would rather have us overdose, than to voluntarily allow us to go through withdrawal.

People need to examine what was happening to the German Economy before the rise of Hitler....there are many ominous similarities to what is going on in America.