My Economic Stimulus Experiment

[Big Black Dog]

If I understand the Economic Stimulus Plan, we are supposed to regain economic stability by spending money, i.e., spend our way back to wealth. Well, to see if a plan like this would really work, I decided to go down to Wal-Mart and spend $100.00. I didn't have $100.00 - only $20.00 so I had to borrow $80.00 from the wife. The US had to borrow the majority of the money to make this Stimulus Plan work so I figured, what the heck, it will make my stimulus plan work. I gathered up my $100.00 and off to Wal-Mart I went.

I shopped for nearly a hour and purchased stuff that I really didn't need - much in the same way our government spends money. When I was leaving Wal-Mart I had $3.89 left from the original $100.00 so I dropped it into that little charity barrel that you see in just about all the Wal-Marts. This was my "foreign aid" gesture.

I came home totally broke. I had spent my entire $100.00.

Well, it's been a month now and still I have not seen any increased wealth like I felt I was supposed to see. That's the promise our government made. If we spend this money, we will become economically stable again. So far, nothing. I'm still out the $100.00 and only have a hand full of crap to show for it.

To add misery to this experiment, the wife is now demanding her $80.00 back and she wants interest. China is going to want interest on the money they lent to us too!

I think my economic stimulus experiment failed. I think the Economic Stimulus Plan for the country is going to fail too, if it works out like my Wal-Mart experiment did. I made exactly "zero" in increased wealth by spending my $100.00.

I came to realize that you cannot spend yourself back into wealth.

Think our government representatives will ever recognize this principal?

 

[Oddball]

Think our government representatives will ever recognize this principal?

They might understand it right now, but there are no votes to be bought in being fiscally responsible when you have the big endless checkbook.

 

[PLYMCO_PILGRIM]

I enjoy the spirit of this post a lot.

However I think someone will tear you apart becuase you made it too simplistic. Get your flame suit on

 

[Zoom-boing]

The stim package failed because it wasn't a stim package, it was a spending/payback/Dem-loving-program/spending/who-gives-a-shit-what-anyone-else-thinks/we're-in-charge-now-so-shove-it/spending bill. I read that only about 1/4 of that $787 bill was actually for 'stimulus' programs.

Sooner or later we will recover; the stim package just postponed it and cost us fucking billions. But, they don't care. Now they're talking another stim package; er, rather they're saying they're NOT talking about another one, which means they are going to try for another one.

Had they left the auto businesses alone, they could have gone into bankruptcy on their own, the American taxpayer would not be out even more billions and they would have restructured and come out stronger. Or not. And if they failed . . . that's what happens when you fail to run the company correctly and fail to build what people want. If they had failed something better would have emerged . . . or we'd be down a car company or two.

If an individual household cannot spend its way of of debt, how can a country? If an individual household overspends, they cut back, they reduce, they spend less. The fact that this logic is ignored by Washington . . . mind boggling.

 

[Skull Pilot]

You obviously didn't spend enough.

Go borrow 1,000 dollars and try again.

 

[Baruch Menachem]

Funny, but off the wall here.

A better metaphor would be if you took the money your wife gave you turned it all into pennies, and your went and moved it around the house, and threw away five pennies every time you moved it from place to place.

The basis for their idea is that money is not circulating fast enough, so you need to put more money in circulation to get more economic activity.

The big Keynsian concept is MV=PQ. That is money times velocity is price of all items in the economy times the quantity of all items. For some reason no one knows, the velocity of money has sunk, therefore price and quantity have gone down. So what you do to fix the problem is increase the money supply to bring the price and quantity numbers up. Sorry if this sounds kind of straw mannish, but this is all I can remember of the argument from 30 years ago.

 

[strollingbones]

I enjoy the spirit of this post a lot.

However I think someone will tear you apart becuase you made it too simplistic. Get your flame suit on

he is in the economy section ...not the flame zone....noobs....i swear...

o dog...i am in the air about the cash for clunkers program....you get cash for 2 to 4 more miles per gal? o please..

as for the 100 at walmart....all you did was help the chinese economy...buying american seems to be a concept lost on people who want to or need to save the few dollars they save at walmart...if you examine walmart prices they are not always cheaper...i dont think our country can spend our way out of this....hell isnt that how we got here....spending?

plus when you think about it...this is such a throw away society....we spend cash for the convience of items...i.e. two pie crusts 3 bucks in grocery....i can make them for under 50 cents....but the modern person would much rather work and pay more for items that use to be "homemade"...why? why do people live dumps but drive new cars? i just dont get how americans think they can live this lifestyle and not pay for the high cost of excess

 

[PLYMCO_PILGRIM]

I enjoy the spirit of this post a lot.

However I think someone will tear you apart becuase you made it too simplistic. Get your flame suit on

he is in the economy section ...not the flame zone....noobs....i swear...

I may be a noob to the forum but look....your in the economy section and just flamed me....so its not too far fetched of a claim on my part .

 

[Oddball]

as for the 100 at walmart....all you did was help the chinese economy...buying american seems to be a concept lost on people who want to or need to save the few dollars they save at walmart...if you examine walmart prices they are not always cheaper...i dont think our country can spend our way out of this....hell isnt that how we got here....spending?

Really lame strawman.

There are still lots of things in Wally World that are made in America.

 

[strollingbones]

o i didnt not flame you....stop being such a girl....

 

[strollingbones]

as for the 100 at walmart....all you did was help the chinese economy...buying american seems to be a concept lost on people who want to or need to save the few dollars they save at walmart...if you examine walmart prices they are not always cheaper...i dont think our country can spend our way out of this....hell isnt that how we got here....spending?

Really lame strawman.

There are still lots of things in Wally World that are made in America.

such as? other than foods what is made in america?

 

[strollingbones]

be careful dude....i check those things very closely when i shop.....i try really hard to buy made in america...and its not a lame strawman arguement either...

o geezes lets just flame the noob? lol

 

[Toro]

Your analogy may be correct, or it may not. It depends on excess capacity in the economy and monetary velocity in the economy.

Think of an extreme example. Monetary velocity is the circulation of all the money in the economy. If monetary velocity collapsed to zero, that means there is no economic activity and the economy has collapsed to zero. If the economy has collapsed to zero, if you have money and decide to spend it, that generates economic activity, and the economy begins to expand. If government spending increases monetary velocity, then economic activity expands.

Similarly, if there is tremendous excess capacity, increasing demand increases economic activity as the marginal cost to add workers is virtually zero and there is no inflation. For example, when there is excess supply, the supply/demand curve looks like this.

If the supply curve is AS2, and government increases demand from AD1 to AD2, then the expansion of the economy will equal a rectangle that is the product of the different between AD2 and AD1, and the line from AS2 to the horizontal bottom.

This does not mean that the stimulus bill is a good idea. Rather, it is to show you that increasing government spending can increase economic activity. Whether or not the spending will have a benefit or cost is determined by the amount of economic activity generated less the borrowing costs used to stimulate the economy.

 

[strollingbones]

so dude do you not think part of the solution is buying american...have you really bought into this global economy?

 

[strollingbones]

who the hell let toro in here with charts? is there math involved?

why does the us as a country....export raw materials to import finished products? why did we allow the manufacting jobs to leave?

 

[Oddball]

so dude do you not think part of the solution is buying american...

No...Economic isolationism doesn't work.

The same crap being shoveled about China today was also said about Hong Kong, Japan, Indonesia, and Taiwan....and that's just over the course of my lifetime.

In the end, you cannot sell anything to someone who has no job or no money.

All of which is beside the point that you can still get plenty of American made goods at Wally World.

 

[strollingbones]

and i am still waiting for you to name them....clothes all made overseas...textiles use to be a big industry in nc...as did furniture...where does the furniture in walmart come from?

 

[strollingbones]

well how is free trade working for you....in nc ...its just kinda sucks for us

 

[Big Black Dog]

Wow, I really opened up a can of worms here. OK, everybody, put the flame throwers away.

Bones, I need a special permit from my wife to shop anywhere other that Wal-Mart.

Skull Pilot - If I spent $1000 at Wal-Mart that would be 10 times the amount I spent. I think that means I would get 10 times of the same thing I got already. Let's see: 10 X nothing = nothing.

Toro - Do you really understand those charts? You remind me of a snake oil salesman!

I think my experiment failed. Nothing will make a stimulus program like this work.

It reminds me of a story about my brother. He wanted to make some money selling hay. He bought 1000 bales of hay for $2.50 each. He sold the bales of hay for $1.00 each. I told him how much money he was loosing on each sale he made. He told me not to worry. He would make it all back up on volume.

That reminds me a little bit of the TARP funds.

 

[sealybobo]

If I understand the Economic Stimulus Plan, we are supposed to regain economic stability by spending money, i.e., spend our way back to wealth. Well, to see if a plan like this would really work, I decided to go down to Wal-Mart and spend $100.00. I didn't have $100.00 - only $20.00 so I had to borrow $80.00 from the wife. The US had to borrow the majority of the money to make this Stimulus Plan work so I figured, what the heck, it will make my stimulus plan work. I gathered up my $100.00 and off to Wal-Mart I went.

I shopped for nearly a hour and purchased stuff that I really didn't need - much in the same way our government spends money. When I was leaving Wal-Mart I had $3.89 left from the original $100.00 so I dropped it into that little charity barrel that you see in just about all the Wal-Marts. This was my "foreign aid" gesture.

I came home totally broke. I had spent my entire $100.00.

Well, it's been a month now and still I have not seen any increased wealth like I felt I was supposed to see. That's the promise our government made. If we spend this money, we will become economically stable again. So far, nothing. I'm still out the $100.00 and only have a hand full of crap to show for it.

To add misery to this experiment, the wife is now demanding her $80.00 back and she wants interest. China is going to want interest on the money they lent to us too!

I think my economic stimulus experiment failed. I think the Economic Stimulus Plan for the country is going to fail too, if it works out like my Wal-Mart experiment did. I made exactly "zero" in increased wealth by spending my $100.00.

I came to realize that you cannot spend yourself back into wealth.

Think our government representatives will ever recognize this principal?

If we had the money to invade Iraq, we have the money to get the economy going again. You need to start listening to left wing talk so you can get the other side. You are clueless. You only know half the story. You do know that the stimulis is going towards infrastructure that Bush ignored? Those things should have already been taken care of. But totally put that out of you tiny little mind. Too much information for a stupid bitch like you. And money is going to unemployment benefits, because the economy is so bad, people are having trouble finding work. You want to just cut those people off? Of course you do, you sorry son of a bitch. You must one of those real Americans Palin was talking about. I think you are a sorry excuse.

And who are all the rich people that profitted from the Iraq war? $10 billion a month for 6 years. Tax the fuck out of them. Problem solve. I just found some more money.