Sunday, May 17, 2009

An interesting thought ...

The government has reportedly committed $12.8 trillion to fixing the economy. If you figure there are 300 million Americans, that's about $4,266 a piece. That's a TON of money if you think about it.
If each person were given $4,000, instead of giving it to the banks, stimulus, etc., the money would probably be better utilized. Let's pretend for a moment that each person was given $4,000 directly. Well, that money could be sent to pay for a credit card debt, which would help out the banks and the card holder. It could be put down on a mortgage, which would help the housing industry, the banks, and the homeowner. It could be used to pay more down on a mortgage, alleviating foreclosures, helping out all involved. You can pay for about a third of a decent car with $4k, which would help the auto industry and the car buyer. It could help the used car buyer since there would be more used cars available for people who couldn't afford a new one. You could put it all in a CD, which would help the banks lend out more money for small businesses and homeowners. Because of the way the local economy works, getting $4k in the mail would surely circulate a lot better than giving $12.8 trillion than to give it to the banks and stimulus.
Let's take this a step further: There are about 117 million households in America. If you parsed this out to households, it would be more than $10,900 per household. Imagine what nearly $11,000 could have done in the last year instead of blowing all those trillions on things that will show no real affect on the economy.
Last year, we had another child and used our stimulus check that we received to pay for the birth of our son. We received the check, it went into the bank, we had our baby and paid the hospital bill with the stimulus. The nurses and doctors who brought our child into the world were paid. So were the vendors the hospital uses. In other words, our stimulus money circulated within the local economy.
At the time that these checks were going out, I openly said it was a bad idea. Sure, give me some of my money back. But, I didn't think it was the best thing to "revive" the economy. I suggested during some discussions on the air and online that if the federal government wanted to truly stimulate the economy, it should give everyone $10,000, not $1,200. What's $1,200 going to do? Nothing really, as we've seen. But, give folks $10,000, and they could really do something with that money - buy a home, a car, save for college or retirement, which all gets circulated by the banks. Of course, this idea was a tad unrealistic at the time. Nobody was going to go into trillions of dollars worth of debt just so Janie and Jimmy can get a new Toyota ... However, as it turns out, the government DID go trillions into debt. But, instead of Jimmy and Janie getting a new car, bankers on Wall Street got $78,000 bathrooms and million dollar bonuses while driving their businesses into the ground. And now, they are talking about TARP money for the insurers and billions more for the endless wars. There really is something wrong with all of this.

No comments: