World Net Daily:

Amidst the dire predictions of imminent catastrophe if Obama’s stimulus package were not passed by the Congress, and equally dismal prophecies of how the stimulus will extend what is looking like a doozy of a depression, there has been a near-complete failure on the media’s part to explain the core principles behind the fiscal stimulus to the American people. This is due to the near-complete ignorance of economics on the part of the mainstream media; one can hardly expect them to explain what they do not understand.

The real problem, however, is that the Keynesian model is simply incorrect. It is based on the very crude idea that the economy, as measured in Gross Domestic Product, can be accurately summarized by the following formula: GDP = C+I+G+(X-M). In English, this means the economy is equal to consumer spending (C), plus investment (I), plus government spending (G), plus (exports (X) minus imports (M)). Since government can only control government spending directly, any failure of consumer spending must be compensated by increasing government spending. That is what the $787 billion is nominally intended to do, to make up for the decline in consumer spending.

However, this is complete balderdash, as a third economic theory points out. The Austrian school, to which I myself subscribe, has repeatedly shown that neither monetary nor fiscal policy are capable of doing more than delaying an economic contraction, and that using them to delay contraction only extends and exacerbates the contraction when it eventually arrives. Austrian theory teaches that credit inflation, which is how they describe the monetarist tool of injecting liquidity by cutting interest rates, leads to investment and consumption booms that will inevitably be followed by busts. It is, in fact, the only economic school with a reasonable explanation for the economic cycles so readily seen in the historical data.

Doing nothing is admittedly difficult in times of crisis. But it is always wise to keep in mind that there is no crisis so severe that government intervention cannot make it worse.

My comment: Pretty good explanation of what has occurred and what should be done. Of course the "economic stimulus" has nothing to do with actually stimulating the economy. It is political kabuki theater for the average voter that gives the impression the "the big men" in Washington are on the job. This reminds me of when the government had national guard soldiers in airports after 9/11 walking around with automatic weapons and no magazines in the weapons or on their person. It is all show and no go as they say at the drag strip.

John Polomny
The Real Deal