What Then Is The Reason For The "Stimulus" Package?

What Then Is The Reason For The "Stimulus" Package?
By: R.J. Fee

Ben Bernanke and other economists have recently been noting the slowing of unemployment, nominal increases in consumer spending and low levels of inventories. These are all leading indicators that this recession is at, or near, its bottom. They also indicate that this recession is, as they have repeatedly stated, a normal cyclical market fluctuation that was made more drastic by the irresponsible activity of several industries enabled by the failure of government regulatory bodies to perform their legal duties.

This enormous taxpayer funded “stimulus” package was supposedly concocted to bring us out of recession. Increased savings rates and the leading economic indicators say that we are naturally taking action that will bring sanity back to the markets. The enormous spending plan has not yet been put into action. Most reputable economists predict that such a large increase in government control and spending will inevitably lead to large scale inflation. This raises very poignant questions. If the stated reason for the stimulus package does not appear necessary and the unintended consequences of rewarding the irresponsible entities with taxpayer money are quite dire, why then would our elected leaders happily continue with such an unnecessary and ill conceived plan? Could it be that the stimulus was never intended to be a stimulus? Could it be that many politicians from both major parties are the scoundrels we originally thought they were? Could assumption of power and influence be the driving force? The American people (you and me) are going to have to be the one’s who apply the brakes. This must be done through the power of the vote.

A Scale Everyone Can Understand

A Scale Everyone Can Understand
By R.J. Fee

I know that the average person is confused by the billion and trillion dollar figures thrown out by our politicians. That is why I have compiled the same ratios to give you an idea of what the United States would look like if it were an American household.

If the U.S.A were a household
Annual Income: $55,000 (2007 U.S. Census report median income approx. $50k)
Annual Spending: $65,560
Total Debt: $220,000
Total Worth: $314,600 (includes median home value of approximately $200,000)

Questions
1. Just how long could your household continue to spend $65,560 while earning $55,000?
2. How long could your household continue to build upon a total debt of $220,000 without facing foreclosure/repossession?
3. Would you lend money to someone with this financial record?

As I detailed in a previous blog, it doesn’t surprise me that individuals have not played by the proverbial rules, because we as a nation have refused to play by the rules of finance for decades.

I arrived at the aforementioned numbers by comparing the following approximate numbers as reported in various government reports:
2008 U.S. revenues $2.5 Trillion
2008 U.S. spending $2.98 Trillion
2008 U.S. Debt $10 Trillion
2008 U.S. Gross Domestic Product $14.3 Trillion

“We might hope to see the finances of the Union as clear and intelligible as a merchant’s books, so that every member of Congress and every man of any mind in the Union should be able to comprehend them, to investigate abuses, and consequently to control them.” Thomas Jefferson 1802