Government stimulus never works in the long term

Government stimuluses never work in the long run. They could work in the short run. But whatever they do is not sustainable in the long run. Its fragile. Its too much dependent on them. It is something that is imposed from the top to bottom rather than something that takes shape using the free market economy from the bottom to the top.

Growth, growth, growth! Why is growth so important? Its because we have a debt based economy. If there is no growth in the economy, the interest payments for the already loaned money cannot be made. Money equivalent to at least the amount of interest on the total debt has to be introduced into the system. This may not necessarily be accompanied with an increase in the value in the economy and may lead to inflation.

Stimulus, Crisis

I like this sentence quoted from here -

“The truth is that the more taxpayer money is dumped to try to fill the abyss, it may become marginally shallower, but only at the expense of it getting wider.”

More people saying stimulus won’t work

More and more people seem to be saying that the stimulus will not work and has never worked. Japan had tried doing it and they had zombie banks and the lost decade of the nineties. They still want to do the same. USA is doing it recklessly. Here is the Fox video -

But the radio talk show host Mike in the video has a point. The deficit spending of USA is still less than their GDP. But the problem is that it has been growing. Their direct debt is closing in on the GDP.