Stimulus

What is so hard to understand? A stimulus bill is designed to jump start the economy, not socialize it. Remember when tax cuts for the wealthy and corporations were proposed and zealously approved by Republican House and Senate and signed by a Republican President? Those were supposed to be stimulating to the economy. In some regards they were. For the most part, however, the wealth was retained and stashed. Some corporations used their newfound wealth to buy back stock in their own company, thus raising the stock value without changing one twit of their corporate operations or profitability. Or create any new jobs. Or benefit anyone except themselves.

The trickle down economy theory has been disproved. For decades now, that myth has simply not worked, nor will it.

The people who are having a hard time economically will spend their stimulus checks for food, rent, mortgages, car payments, and other consumables. This financial help will stir businesses and their bottom lines. They will have money to pay their staff and thus sustain the economy. Bit by bit the economy will strengthen. 

Same with forgiving student debt. Those people will then have credit strength to buy and finance a new car, or pay rent, or buy a home and support a mortgage. And new families! Heavy student debt retards all these things; forgive the debt and watch the economy grow!

Larry Summers is wrong about his fears of inflation. Why? Because the money in the bill will pay for necessary things, not bloated consumer products. We have an economy that needs rebuilding from the negative effects of the pandemic. The stimulus dollars will go for sustaining families in their homes and neighborhoods. Most likely debts will be reduced rather than creation of new debt and other inflationary behaviors of consumers. Rebuilding the economy and stability of the middle class is the aim of the stimulus bill.

The middle class is hurting. And that is not a classist statement. The middle class used to be about 70% of the economy. These were the people who bought and built homes, took out stable mortgages, bought new cars and financed them, kept shopkeepers busy replacing inventory in their stores with clothing, household goods and a host of other things. Measured consumption was supported by the middle class. That is the huge platform upon which the great American Economy of yesterday was built.

No more. The Middle Class has shrunk. Subjugate this class of people and you knock the underpinnings out from the economy. The poor always struggle. They do not build the economy. The rich do not build more goods others cannot afford to buy. Without the middle class the wealthy can only consume luxury goods and those don’t support vast numbers of working people. They simply do not. A big economy must be supported by a big number of spenders and consumers. That is the definition of the middle class. Without them, the economy is lost unless foreign markets replace domestic markets.

So, vote for the stimulus bill, distribute $1400 per person to the middle class and the poor. Restrict such checks from wealthy people. They do not need it. They have enough. It is the others who are in need, and they will spend it and help the economy recover a little of its punch.

Inflation, Larry? Hah! Hardly. Restudy your economic textbooks.

February 9, 2021