What think ye...

of stimulus packages? well I know what you think, i.e. that the latest bailouts were necessary. Just thought I'd ask your thoughts on the following:

pg 21 "But the economy didn't grow because they consumed more. They consumed mored because the economy grew."

and pg 45 "Saving creates the capital that allows for the expansion of production."

A few years ago when I was first interested in economics I realized the fascination had a lot to do with the fact that the econ principles that made sense to me parallel'd gospel principles. Avoiding tough choices and taking the easy way out never seems to work in the gospel, and the same seems to apply in the economy, such as printing our way to prosperity. There is always a catch when it comes to the government's quick fix remedies. They are always about the pleasure now, pain later. I guess we voters are to blame, we put those kinds of politicians into power.

also on page 9

"Able had just increased his productivity, and that was a good thing for everybody..."

Good thing for everybody, cuz you benefit from the lower cost. Unless of course you are now the less productive company and you get to go bankrupt. Looks likes it's time to contact your local politician, you see There's a Bill For That!

So simple yet...

...so foreign to politics. On page 9 of Schiff's cartoon book it says thus "By doubling his productivity Able is now able to produce more than he needs to consume. From gains in productivity all other economic benefits flow." I added the emphasis.

How often do you hear of productivity being the main goal behind any sort of economic stimulus? Instead they tout tariffs that encourage domestic production, production which is less efficient. They pander to unions that are entirely less productive. They inject newly created funds (cuz they sure haven't underconsumed to procure those funds) as an effort towards stimulus, funds which only increase the money supply, which in my mind is the only genuine definition of inflation. Deficit spending? As if money is wealth. I'm obviously no Keynesian and I continue to struggle to see how deficit spending can do anything but prolong the necessary corrections.

I think a HUGE principle from this simple story thus far is simply the need for underconsumption to precede any sort of growth whatsoever, yet underconsumption goes against everything our government is built to do. Our government not only overconsumes (even the 90's show large increases in the money supply, according to "sources", and it's a lot easier to run a surplus when that happens) but it seriously discourages underconsumption in the private sector.

Government has managed to take every healthy incentive and pervert it. Moral hazards run rampant, thus disabling risk to function properly. Genuine savings is almost irrational due to inflation. Grow your earnings faster than inflation or die.

Anyway, tell me what I'm missing.