Economics ad absurdum

Here's a good one. Four hundred billion to stimulate the economy. The economists shilling for the federal government swear this stuff actually works. It must. They have PHd's and expense accounts bigger than your IRA.


Who are we to argue? If they say it was necessary to save the economy, well, it must have been.

Here are some things they haven't mentioned.

First, these government economists are, to a man, followers of the Keynesian school. Know anything about Keynesian economics?

Here's a sampler. It's a little gem called the Saver's Paradox. It postulates that saving money depresses the economy. That's because saving money removes it from circulation. So only profligate spending your hard earned money will stimulate the economy. And if you don't spend enough, the government will step in and spend even more of your money. About four hundred billion, or so.

Now, you probably already see the problem with this logic. It might be true, only if people were stuffing their money into mattresses, or burying it in coffee cans out behind the kids' swingset.

But they don't. They put their money in banks. And the banks loan the money out to capitalize businesses, meet payrolls, and buy and sell goods.

Ergo, the more you save, the more aggregate wealth the country amasses. Spending, on the other hand is just money circulating without working.

You know this. So why don't the economists and politicians? Simple. You earn money. Budget money. Save money. Invest money. They just read about it. Any money they ever had, came from you.

Think about it.