A second "economic stimulus" ?

[NW-Bound]

This morning, I heard on CNBC some pundits talking about the possibility of a second "economic stimulus". Whether they were talking about it in the form of another rebate check or something else, I did not catch.

I barely got my rebate check two days ago. While I am not about to return it, or not cash it, I wonder if it does any good. I do not doubt that the rebate check really helps some people to pay for higher gas prices. However, I have reservations as to whether it helps in the long run. If a country can get its economy out of trouble by printing money, the world would not need anything other than printing presses. There would be no poor nations on earth.

I am not an economist, but suspect that increasing the money supply in this manner only causes inflation, which in turn devalues the dollar and causes the price of imports to rise, crude oil among them.

 

[jclarksnakes]

I heard Obama talking about a second economic stimulus package this morning. It might have been on CNBC. He described a plan of energy rebates for working families.

 

[2B]

Bread and circus -- it's been done before and it worked pretty well for the politicos back then.

I am having a hard time with our relentless talking heads repeatedly telling us how terrible it is. Under St. Bill of Clinton a 5.5% jobless rate was "full employment" and the little bumps were just "little bumps." Now with home prices "crashing" to levels not seen for 2 or 3 years - 5 at the most - it's a wonder we don't all commit mass, group suicide.

On another thread I think I mentioned that the price of gasoline is costing DW and I about $100/mo. The rest of the inflation hasn't shown up in our spending so far. Maybe we're just naturally adjusting to some prices going up and buying less of them and more of what's gone down or stayed about the same. I haven't really looked into it.

It wouldn't surprise me to see a "working poor stipend" getting enacted. It's another step down the path to the nanny state where we all become dependent on Uncle [-]Joe[/-] Sam.

 

[Midpack]

Below

 

[Midpack]

The first one hasn't/won't do any good and another one wouldn't either. Pure pandering and no one calls them on it - or 'bread and circus' as another poster noted.

For decades now, politics has been 'the art of bribing us with our own money...'

 

[Dawg52]

I didn't get the first one. If they will send me one, I promise to spend it.

 

[ats5g]

I'm not sure they're printing money. Isn't the gov't just borrowing money [by issuing treasuries] to get the money to issue the "stimulus."

btw - no one I know spent their stimulus money. They either saved it or paid down debt.

 

[W2R]

Here's an article about the legislation that is apparently being negotiated or drafted for a second economic stimulus:

Democrats in Congress mull new economic stimulus - Yahoo! News

Infrastructure projects -- road and bridge building and other government-funded construction -- top the list, according to those aides. At least $8 billion in funds could be sought just for these projects, although aides said there were no firm cost estimates yet for any portion of the legislation.

Rep. Barney Frank, the Massachusetts Democrat who chairs the House Financial Services Committee, is hoping such a bill also would help deal with some problems related to the unfolding home mortgage crisis, especially if Bush vetoes a broader bill moving through Congress.

 

[retire@40]

The ancillary cost of sending these stimulus payments out is mind boggling.

Postcards, letters, overtime, more followup letters, checks, confirmation letters, etc. Could they make it any more expensive, wasteful, and cumbersome?

This whole program is like giving yourself money, but in a very special way.

First, calling your friend on the telephone to tell him you are going to write him a check.

Then writing and mailing him a letter telling him you are about to mail him a check.

Then writing the check.

Then driving to the post office to mail the check.

Then in a few days writing him another letter telling him he should have received the check.

Driving to the post office again to mail that followup letter.

Asking him to make a special trip to the bank and stand in line for a half hour to wait for the teller to deposit that check into his checking account.

Then the friend would write you a letter telling you he is about to write you back a check.

Then the friend would write his own check back to you.

He would drive to the post office to mail that check to you.

He would then write you a followup letter telling you he just mailed you a check a few days ago.

He would make a special trip to the post office to mail that followup letter.

When you receive the check, you would get in your car and drive to the bank, stand in line, and cash the check.

You now have spending money that you didn't have a the day before.

 

[TromboneAl]

Postcards, letters, overtime, more followup letters, checks, confirmation letters, etc. Could they make it any more expensive, wasteful, and cumbersome?

I agree, but OTOH, all this wasted money goes into the economy. Or is this the broken window thing again?

 

[brewer12345]

It wouldn't surprise me to see a "working poor stipend" getting enacted.

This already exists in the form of the Earned Income Credit, basically a negative income tax for the working poor. There is actually fairly sound economics behind it.

I think a second stimulus package may well be forthcoming. But between the stimuli and the dramatic drop in fed funds rates, the extra liquidity the Fed has pumped into the system, etc., if we do get a sell-off in oil prices the economy will be going gangbusters next year.

 

[OAG]

Gee, we spent ours at least 4 times (new TV, New DT and NB Computers along with a few added things for them, prepaid food through Kroger's Rebate + 10% Gift Card Program). I am currently on a sort of unplanned vacation about 400 miles from home; driving in a SUV (of all things; should be parked at home in the driveway). If they want to send another one - have at it - I'll spend that one multiple times too. It is the Patriotic thing to do; after all today is Independence Day, isn't it?

 

[TromboneAl]

Can't some analysis be done to evaluate the effect of stimulus #1?

 

[HFWR]

Can't some analysis be done to evaluate the effect of stimulus #1?

Politicians don't get elected for "thinking about it". We want ACTION!!!

 

[W2R]

between the stimuli and the dramatic drop in fed funds rates, the extra liquidity the Fed has pumped into the system, etc., if we do get a sell-off in oil prices the economy will be going gangbusters next year.

What a pleasant thought!! I'd love double digit returns for a change and the way you phrase it as "going gangbusters" causes me to greedily contemplate returns possibly even exceeding 25%. I sure hope you are right! That would really pump up my ER nestegg during my last year of work.

However, I am not holding my breath for this to happen in 2009.

 

[Spanky]

This already exists in the form of the Earned Income Credit, basically a negative income tax for the working poor. There is actually fairly sound economics behind it.

What's that sound economics and their results?

 

[Marquette]

I didn't get the first one. If they will send me one, I promise to spend it.

ditto

 

[brewer12345]

What's that sound economics and their results?

Search the literature, but basically it incentivizes the marginal worker to stay in the labor force rather than opting for welfare, etc.

 

[ziggy29]

What's that sound economics and their results?

The sound economics as I understand it is that refusing to work should never be more lucrative than working, and sometimes you have a situation where collecting unemployment and other benefits is more lucrative than working a low-wage job. The EITC, among other things, encourages these people to take the job. The EITC paid out to these households is often considerably less than what the taxpayers would have to eat if they were unemployed.

 

[maddythebeagle]

Politicians don't get elected for "thinking about it". We want ACTION!!!

Besides politicians usually get in trouble when they study the results of stimulation

 

[brewer12345]

Besides politicians usually get in trouble when they study the results of stimulation

 

[d]

Politicians don't get elected for "thinking [-]about it[/-]".

 

[Spanky]

I didn't get the first one. If they will send me one, I promise to spend it.

The government, I assume, is hoping that people would spend the money to spur the economy so that more jobs would be created. In all honesty, I think the middle and upper-middle classes would put money into savings or pay down their credit-card debts. As a result, no new jobs would be created.

 

[calmloki]

Now wait a minute - the government is sending people money?! (note to self: you're doing it wrong. Rethink April, June, September, January mailings)

 

[growing_older]

What makes them think a second stimulus is necessary? Sagging stock prices? Maybe we should send the second check to everyone who didn't get a first check and ask them to buy something nice for their portfolio.