There are many undeveloped and third world countries that have what can only be called lagging economies. According to the naive American,European and in essence world politicians and their lackey economic advisors all a country has to do to get an economy moving is to stimulate the economy by an infusion of cash. Zimbabwe tried this and look how it turned out.
Lets look at the mechanics of putting money (when saddled with unpayable debt) into the hands of failing businesses in hopes of making the economy robust. The recipients of the funds are businesses that are losing business and operating in the red. There also could be local and state governments that are over budget. There could also be neglected government obligations such as retirement schemes, infrastructure, public works and whatever else the government undertook that it can no longer afford. Most countries have experienced these blown budget problems especially after they have taxed and spent themselves into a deficit. So according to the latest nonsense from Washington all that is necessary is to pass a law that transfers the bad debts of the failing businesses and governments to the taxpayer.
If such a scheme had any validity wouldn’t it work for poor nations as well as rich ones? For after all the U.S. government has far more debt than its taxpayers can pay which is the case with most other countries of the world.
The people carrying the governments financially have been bled so badly by taxation and regulations they are now just trying to hold on to enough to survive. And the culprits who confiscated and spent the wealth are now trying to make amends (so they can continue their charade) but the method of going to the trough that has run dry isn’t working. It is pure nonsense to say the money will be given to those who are losing while taking more from those who are winning in the marketplace. This makes a mockery of the marketplace. What kind of a market can there be when the only way to survive is to rely on giveaways from the government? It is reversing the way the market works. Customers look for lower prices and higher quality in a normal market. In the new market of failures higher prices and lower quality will be rewarded by the government subsidies and all standards of living will tumble.
It is easily observed if government money (as if they had any ) is going to obligate failing businesses to continue losing operations there is only the printing press that can provide dollars that will lose value as they saturate the market. Zimbabwe is the extreme of this model and is the destiny of any who try to emulate it. Printing money has never saved an economy nor will it now. There are many Americans denouncing this nonsense but there are too many ignorant cowardly politicians willing to give it a try.
Do remember who they are when the next election comes around and give them the payment they deserve for approving an action that is suicidal.Tags: bankruptcy deficits Stimulus