I think my problem with current economic thought is the Bob The Builder attitude of "Can we fix it? Yes we can!" For those wondering what I'm talking about, see what some of our current presidential candidates are saying: Clinton, McCain, Obama, Huckabee, Edwards, Giuliani and Romney. The current president has a plan. The leaders of the House and Senate are working with him on it to make it a reality. Let's just say there are a whole lot of plans out there. If the current leadership (executive and legislative branches) pass the one being discussed, everyone will be taking out a loan for $800 or $1,600 for couples (now dropped to $600 each with an additional $300 per child.)
Why do I say 'loan'? I believe that is the best way to describe accepting money from China or your children (and children's children) that needs to be given back somehow. With a deficit, money has to come from somewhere. We don't have a bank account full of all the tax money sent to the government... it's empty. To keep it from becoming an entire black hole, more money is printed which drops the value of what is out there. Economic law of scarcity reversed. This inflates the prices of items purchased abroad as they track our international borrowing and spending by our politicians. These debts no doubt will be passed on to our children.
Yet, for some reason, there is a belief that each of us would spend $800 (updated to $600) each on items that could increase production here in the U.S. to spur growth. Yet, it's hard enough to find items just produced in the U.S. and most people would probably just pay it to their home loans (that just so happen to be secured by foreign investors.) I also have trouble believing that it will happen soon. Even if an economic stimulus program were agreed to this week, we'd see it at the earliest in May. I'd expect even later seeing as how tweaking things often slows something else down. Heck, the recent changes to tax legislation by Congress will be delaying tax returns for early filers. I'm thinking that they need time to print the money.