Americans hoping for a big economic boost from President Obama's economic stimulus programs got a douse of cold water Thursday: The White House's top forecaster said the largest impact of the stimulus on economic growth is probably in the rear view mirror.
That's the case even though unemployment continues to rise and many of the stimulus dollars haven't been spent.
"Most analysts predict that the fiscal stimulus will have its greatest impact on growth in the second and third quarters of 2009," Christina Romer, who chairs the President's Council of Economic Advisers, said in testimony prepared for Congress. "By mid-2010, fiscal stimulus will likely be contributing little to growth."
In the long run, John Maynard Keynes is still dead. Unfortunately, his economic prescriptions will not die.
When government spends money, it is spending other peoples money. There is a natural disconnect of the value placed on the money by those who earned it when it is spent by those who merely appropriated it.
Stolen money is cheap. Earned money is dear.
Earned money is far more likely to be spent with care than looted money.
No politician and no bureaucrat can ever be as invested in the outcome of the spending of an appropriated dollar then the person that originally earned it. Whether that dollar is spent on a pleasure or invested for the future, the one who earned it is the only one that is able to truly appreciate what that dollar cost him to earn.
To a person that earned a dollar, the notion that it should be used to pay one person to dig a hole and to then pay another person to fill it, sounds like utter madness. To a Keynesian that appropriated a dollar earned by someone else, it is eminently economically sound.
Syrah, this is relevant to your post, and I think you might enjoy it:
ReplyDeleteSaving For Greatness
Hi Pi Guy.
ReplyDeleteThere is a great deal of truth in that link.
I lived it first hand.
By age thirty, I had my retirement set and paid for. It will not be a luxurious retirement, but one that will require much care and rigid frugality. If I had to retire today, I could live on a boat in a mid-sized coastal city with modest comfort. (Living on a boat is actually very cheap. Your accommodations are very tight, but for everything great and small, there is always a trade-off.)
Having all of that in my back-pocket has been very liberating. It allowed me to do things that had I not saved early in life, I would never have had the opportunity/courage to do. It allowed me to walk off jobs that had gone bad and to tell other employers that if they put me on certain unethical projects, I would walk out the door and to mean it. I was able to drop everything and help take care of a sick relative at the drop of a hat. It has also allowed me to choose jobs that I thought would be great experiences even if the pay-rate was less than impressive.
Life has been good.
I owe a great deal to my Dad for having whacked me hard with the “save-save-save” cudgel.
A savings and the ability to make space in your mind to set some of your earnings aside for the future is very liberating.
Thanks for posting that link here.
Hi Syrah (and Pi Guy!) - there is much more than a modicum of truth in the link and in your story Syrah.
ReplyDeleteI have worked VERY Hard for most of my life; I saved a lot, got married, got divorced, got nearly broke. Kept working VERY HARD saved a very nice and tidy sum, gave almost all of it to a charity I helped start to help unemployed Vietnam Veterans obtain full time career or life time type jobs. Kept working, made more money, saved more money, got married, got divorced, got broke.
Then I kept working hard, saved my money some more and got cancer when I didn't have health insurance; all of what savings I had left went for that, got health insurance,got broke, still broke.
I think the lesson to be learned from my experience was that the BEST THING I DID with my hard earned, saved money, was to give it to Charity.
Oh, and to have a pre-nup agreement!
But saving so you can have "FU" money if you're working at a job that asks you to do something illegal or immoral or unethical is a good thing too. As is saving for retirement, no matter how much of an edge you may be retiring on. But once you get past that point - then I think giving savings (over and above the point of FU money and tight retirement money) to good, charitable purposes is still the best thing anyone can do with their money.
Hi RW,
ReplyDeleteI agree.
There is a value to charitable giving that is immeasurable.
Having the discipline to set aside some of your earnings for a rainy day gives you the opportunity to help others with their rainy days as well.