Monday, February 17, 2014

Stimulus

The numbers came out on the stimulus the federal government did during the recession. The federal government initially "invested" about $800 billion into the economy. According to the federal government the stimulus help GDP grow 2-3% and created 1.6 million jobs per year for 4 years. Unfortunately, the recession destroyed 8 million jobs and lowered GDP 2-3% during the same time period. Looking back over 5 years the $800 billion did not buy very much, but it might have kept the country out of a depression (though that is debateable). What is forgot in the numbers is where did the $800 billion come from? The federal government did not print the money (though the FED did during the same time period). The federal government borrowed the money (or took it in taxes) from the private sector. What if the money had been left in the private sector? Would there have been a stronger recovery? I believe so, but we will never know. What is a fact is that the federal government is about $15 trillion in debt and we have yet to recover from the recession. How are we going to pay all that money back?

What do you think?