Prosperity Through Spending
January 16th, 2008 by 
reality
The politicians are scurrying to do what they do best - spend.
Lawmakers are looking at an election-year package of about $100 billion to $125 billion that is likely to include tax rebates of about $250 to $600 to get money quickly into the hands of consumers.
Savings? Investment? Not very likely. If spending is so great, then why isn’t Zimbabwe the richest country on earth? We are facing a depression because excess consumption has crowded out investment. The proposed remedy is more consumption - and more borrowing. That is called the triumph of hope over experience. As Bill Fleckenstein says:
If we stop attempting to bypass the creative destruction of capitalism, we will finally be able to bring about a recovery built on a solid foundation instead of the quicksand underlying the 2003-07 “recovery” that was built on the housing mania. Though I would like to think the politicians and the Fed get the message and will let the process play out, I am not going to hold my breath.
Politicians are terrified of saving. It breeds confident, independent-minded citizens who are not dependent on the politicians for a continuing series of free lunches.
Posted in Bill Fleckenstein, Income & Consumption, The Economy, The Fed, The Fisc | 
January 18th, 2008 at 4:47 am
Our last data point. 2001 tax rebate. One year later, 2002, the stock market hits bottom.
January 18th, 2008 at 10:47 pm
“Politicians are terrified of saving. It breeds confident, independent-minded citizens who are not dependent on the politicians for a continuing series of free lunches.”
Do you really believe this? I don’t think most of them are smart enough to make these connections. This is very cynical to me and I am the king of the cynics! Maybe a few believe this but this smacks of conspiracy theory. If true, it is very, very dark and sinistar.
January 18th, 2008 at 10:48 pm
meant “sinister”… fat fingers.
January 19th, 2008 at 9:38 am
The politicians may not be very smart, due to inbreeding I guess, but the consultants who structure their campaigns are.
January 19th, 2008 at 12:21 pm
ah, yes… the Carl Roves of our world. They are the true heart of darkness. I agree with that. It is really the shadowy figures in the background pulling the strings that are ruining our world and playing power games. Dick Cheney and the neo-cons pull GWBs strings… I am scared to think of the source of greed/corruption/selfishness/true evil that pulls the Vice-Presidents strings. I think there are even darker forces than Rove at work there.
January 20th, 2008 at 3:29 pm
My grandparents lived through the great depression and it altered their thinking for the rest of their lives. They grew a garden, avoided debt, saved every penny they could spare, and spread their savings amongst a dozen banks (which was a big hassle upon their deaths).
I used to think that they were crazy but now I am doing the same thing.
So are we Doom & Gloomers akin to the Y2K nervous nellies or are we correctly positioned to buy assets for pennies on the dollar after the crash?
I don’t know the answer to that question but I sometimes wish that the train wreck would proceed a little faster so that I can see how the story ends (and if cash is the right choice).