Man I wish our President would demonstrate that he has some notion of how economics works. I about strangled yesterday when I read this comment from him:
It’s very important for the Senate to finish their work quickly because the sooner we can get money into our consumers’ hands, the more likely it is, is that this economy will recover from this period of uncertainty.
The government doesn’t want us to bank that money or use it to pay off debts. It believes we will go out and spend the money, and that will make our houses worth a lot again. The idea is this: Say, for instance, I got $600, and I spent it on strippers. Those strippers would then buy clothes at Bebe, and the person who owns Bebe would buy the crappy house I overpaid for and get me out of the financial predicament caused by unscrupulous mortgage lenders and not by my addiction to strip joints.
This might soften the recession if Milton Friedman hadn’t proved 50 years ago that most people base spending decisions on long-term income projections. Only poor people immediately spend checks they get in the mail. And if there’s one thing I’m sure of, it’s that poor people aren’t going to save the economy. Also, if I know anything about the workings of the federal government, the process of writing and sending a $600 check is going to cost about $600.
