Sunday, March 7, 2010

Why passing a stimulus package in a recession is a good idea.

There is a lot of talk on Capital Hill about passing another stimulus package. Many Republicans are saying that the first stimulus package was a bad idea, and they are looking in the 4th dimension. In order to be a true leader you need to see in the 5th dimension.

Dimensions. The first dimension is a line with no thickness. The second dimension has vertical and horizontal axes. The third dimension is what we see with our eyes, vertical, horizontal, and depth. The fourth dimension is time. The fifth dimension is parallel universes, or what would happen if something didn't happen.

Many people on the conservative right say that we need to allow leaders of companies to have their companies fail if they do economically risky things. This is an extremely capitalist viewpoint. They forget that who the burden really falls if the company, be it Chase, Bank of America, Washington Mutual, US Bank, Ford, Chrysler, Dodge, General Motors, etc., fails. It fails on the millions of workers who work for those companies. The 7 car manufacturers I mentioned employ 390,200 people in America which would be a huge hit to the economy. The 3 banks I mentioned that still exist hold $4.6 trillion that would then have to be spent by the federal government to make sure that their customers keep their life savings. It is scary to think of the Federal Government spending $4.6 trillion in one year making sure that people don't lose their life savings as opposed to spending no more than $1 trillion in order to avoid spending $3.6 trillion dollars more (more than the annual budget) to make sure people have money to live.

Another thing, the GDP of America decreased from 1929 to 1933 when the government under Herbert Hoover's administration did nothing. Hoover could have proposed to Congress to stimulate the economy, but he didn't. In 1933 President Roosevelt proposed a stimulus (New Deal) to bring us out of the depression, which it did.

Food for thought: Where would America have got the money in 1933 to go to war? How did America have enough to go to war in 1941 without running trillion dollar 1940s dollars deficits as opposed to the much smaller amount in 1941-1945?

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