Government is always a net online pharmacy to economic growth. By this I do not mean government spending is not economic activity. Only that it comes at the cost of more economic activity than it creates.
Imagine that it takes three gallons of gasoline to move a car 100 miles along a road. Now imagine that you take the gasoline engine out of the car and replace it with an electric engine. Then you run the gasoline engine to generate the electricity to run the electric engine. Does anyone think that this would somehow use less gasoline or take the car 101 miles? Anytime you use energy to create energy a certain percentage is lost due to friction or inefficiency. It is the same with government taxation and spending.
All wealth is created in the private sector and must be siphoned off for government use. This will always create waste and ultimately a reduction in overall economic activity. In the short run, because government can spend money it does not have, it can give the illusion of increasing growth. But it is at the cost of future wealth.
My prediction is that we will see this born out in stark and painful reality very very soon. The stimulus spending is coming to an end and with it the sugar rush in the US economy is wearing off. Just this week we saw the news that 652,000 workers simply quit looking for work last month. This is the most in US history. The news is bad wherever you look. Retail sales, home sales, factory orders, all are down again just as some were beginning to predict a recovery. Even wages of those working are beginning to decline.
So we spent a Trillion Dollars.
Pause on that for second.
A Trillion Dollars in stimulus funds and unemployment has continued to rise through out. The truth is we have wasted that money and we, and our children, and our children’s children will be paying for it for generations. The net effect of which will be to inhibit our ability to ever recover from this recession.
Because government has no profit motive it can never be trusted to make wise investments. Wise investments produce a return. They produce returns that are again invested and create additional returns. This is something government can never do. Only private industry duly incentivised with the desire for wealth can create jobs.
Next year Obama and the democrats will begin to push for new taxes to pay for their wasted spending. Those taxes will act as an additional burden on a system that is already near collapse.
Anyone who says "Stop Spending!" will be demagogue’d as cruel and selfish. We will hear endlessly repeated accusations that we want to solve our economic problems on the backs of the poor.
But if we do not stop spending we will only have the poor left.
and maybe that is the goal. Eliminate or subjugate the middle class to the point where we all genuinely believe that only the government can provide for our needs.
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