Will Stimulus Ever Work?

[TheNegotiator 13]

Will stimulus packages being implemented the world over ever work and are they in so deep that they have to make it work?

 

Central banks keep pumping money into the system and really we keep going nowhere. If you were trading and you were buying and buying a stock but it wasn't budging, what would you think might play out next? Well my guess is there might be a good deal of downside risk. If others were buying too, that'd only serve to amplify any break.

 

I suspect that we are too dependent on big corporations for economic recovery and this is at the heart of the problem. But back to the 'solution'.

 

I think a nice metaphor for the way we are right now is we're in a kind of "economic biostasis" if you will. As we become more dependent on the drugs(economic stimulus and government intervention) we become more susceptable to infection(economic shocks/extremes) when they're taken away. So the question is how and when will we be weaned? The original plan was for the economy to have begun to have picked up by now and to start to withdraw stimulus slowly. But the ecomony still isn't great is it? So it didn't work that well before so why not give some more drugs? What happens to an addict when they go cold turkey?

 

I don't know what they're going to do, but my feeling is if they don't change their approach, the result in the end won't be pretty.

[zdo 20]

Negotiator,

Great post.

 

re Metaphors … I like a spinning top metaphor, wobble and end dynamics, etc… a spinning top accelerated by ‘printing’ and fattened and heightened by derivatives, etc.

 

Domestic and international dynamics “makes it much harder to notice what is actually going on. … the money system is like a treadmill that requires continuous economic growth, even if the real standard of living remains stagnant. . . . This need for perpetual growth is another fact of life that we tend to take for granted in modern societies, and one that we usually do not associate with either interest or our money system” Nystrom

 

‘They’ will not “change their approach” ever. Money inflation, stimuli, however it’s couched, is beneficial to them. We are the ones who must change their approach – not by modifying the existing fiat money systems but by replacing them completely. Thinking and working (with them) in the consensus world view only prolongs their regime and intensifies the ultimate pain to the many… each of us either supports the spell casting or we don’t – period. We each assent to the consensus and ‘label’, etc. anyone who threatens that homeostasis, etc or we do the opposite. There’s not much middle ground really. Beware ‘conservatives’ of the current system, the current constitution, etc. The current system was a great try, but it was structured and morphed to let ‘maritime law’ etc etc slip in, - > yielding gradually snowballing corruptions ...

 

Have you read up on Austrian type economics, Mises, Fakete, and more currently, the foundational works of Casey, Amerman, Gnazzo, Kirby050206Graft, Schiff, etc?

 

zdo

[MightyMouse 12]

It depends on what you means as "work".

 

Does spending money as inefficiently as possible ever work?

 

The market will clear all ills better than any unnatural method. The problem is that letting things happen naturally will not get your party reelected.

[TheNegotiator 13]

zdo,

 

Thanks! I can't say I have read those guys, but then I'm no economist. I do however, try to get a feel for the way we might move based on broader economic scope. I'm also always open to opinions and to listen/learn from others.

 

MM,

 

Lol. Too true on all accounts! I believe the market can help cure but it needs a little motivation. I think that's the view of big ben too, but he's gone a little trigger happy!

Edited October 14, 2011 by TheNegotiator

[zdo 20]

Will stimulus ever work? So far the only places it ever worked was in a mainstream economist's head or an insane politician's gut...

 

The fed has been 'stimulating' since its inception in ever increasing degrees - and the ones it has ever worked for at all were the very first recipients of any new money... didn't really even help them in the long run... 'banks' were the first recipients of last major stimulus and they are ultimately in the same mess as ever...

 

The federal gov't has been 'stimulating' state and local gov'ts in increasing degrees for decades now (to centralize more power) ... never worked yet

You Know That Your City Has Become A Hellhole When

 

Here's what happened when they 'stimulated' education

http://www.zerohedge.com/news/student-loan-racket-complete-infographic

Edited October 14, 2011 by zdo
no reason

[bobcollett 10]

Hi,

Stimulus does work, short term.. It keeps the politicians in power and it creates inflation.

Inflation is good for stocks and commodities. They go up.

Thats good for us traders. There is movement.

Inflation is very bad for the man in street. His lifestyle falls.

 

The real problem is unemployment and it has been with us for hundreds of years.

In olden days , when the serfs started grumbling,the king formed an army and marched off to Moscow. That took care of a 100,000.

Today we have sent our inventions to Asia to be made . The jobs are gone .

They wont return so we have stuctural unemployment.

 

Technology has always solved our problems in past.

The 50s saw the space race.

The 60s saw the Beatles

The 70s saw nothing. USA standing still

The 80s saw the arms race.

The 90s saw the computer.

The 00s saw the cellphone

Is there a new technology that can turn us round?

The iPad will change our way of doing business

But we sent it to China to be made.

 

There is only one way to solve unemployment.

Balanced trade.

And thats the start of isolationism. A swearword with mainstream economists.

I remember writing a final exam on International Trade. The question was easy. Discuss the comparative advantage.I can make shoes cheaper than you . You can make socks cheaper than me . We trade.Now if you can make both shoes and socks cheaper , I am

dead. To keep me busy I'll open a bank to keep all your money. Does this ring a bell?

Now the bank has failed and the stimulus is there to keep the bank open so some of us have jobs.

 

Balanced trade means you can only sell as much as you buy.

So I will sell you shoes and you will sell me socks.Even if my shoes are so expensive. Otherwise , no trade.

Of course there will be inflation . Thats fine for us traders.

The world economy will shrink,but the jobs will return to America!!

 

As a closing comment....

Did anyone see the Inflation report yesterday?

Producer prices at wholesale level rose 6.9% for 12 months

The retailers must add a margin .So inflation is about 9%. Unless the retailer sold the goods at a loss. Somebody is not telling the truth.

 

Please note these are my thoughts and ideas. And the research is minimal.

I await the onslaught.

Regards

bobc

[SIUYA 11]

Bob - "The 70s saw nothing. USA standing still"

 

The 70s had Disco Fever - there was no way it was standing still !!

 

On a lighter note - - stimulus woks for for a short period of time, whereas real policies for incentives (isn't that what the system thrives on) work over the long term....so in answer to the question...Will Stimulus Ever Work?....no.....just ask Japan.