Only productive people can create stimulus

Freedom New Mexico

It has become increasingly clear that the presumed agent of fundamental change in the way Washington does business is firmly committed to the oldest tool in the Washington toolbox: the notion that government, using our money, can spend its way to widespread prosperity.

Leave aside the fact that the tax rebate of last spring alleviated the depth of the recession only marginally, that $350 billion spent on capitalizing financial institutions hasn’t normalized the credit market yet by a long shot, or that the Federal Reserve has more than doubled its balance sheet to over $1.2 trillion in an effort to bolster financial markets with few discernible results.

Forget for a moment that China, which has largely facilitated the U.S. government’s debt addiction by buying more than $1 trillion of that debt over the past several years, has been battered by the global downturn, needs to pay for a $600 billion domestic stimulus package of its own and is therefore less likely to buy U.S. debt in the near future. And put aside concerns that increased infrastructure spending, a key feature of the still-evolving Obama $800-billion further stimulus program, will provide little if any immediate stimulus.

There are more fundamental reasons to doubt whether throwing more money at a problem largely if not entirely caused by loose money and government incentives and mandates to overspend and overlend will yield the kind of recovery that