Stimulus may be slow to stimulate (Jan 29)
By Chuck Doud
The Madera Tribune
It’s hard to say what the eventual effects of the $819 billion economic stimulus initiative will be, because the effects of the last trillion- dollars-plus in stimulus packages also are unclear. The tax refunds sent to almost all of us early last year, and the wheelbarrows of cash sent to the financial industry last fall don’t seem to have done what they were expected to do, which was turn the economy around.
Maybe we just need to be patient, and remember some unpleasant facts about our present-day economy:
* First is that a great deal of what we buy isn’t made in the United States. Those who went out and spent last year’s tax rebates, as they were supposed to do, probably bought things that were made abroad, and as a result, a lot of the money that was spent didn’t stay in the U.S. very long.
* Second, last year saw the largest transfer of wealth from the U.S. to foreigners in our history. It occurred during the runup in oil prices. That money will never return to us, except, perhaps, in the form of loans, on which we will pay interest. Add insult to injury.
* Third, our experiment in “free” trade has not been a success — at least not for the U.S. as a whole. In fact, we have taken a pounding. Our balance of trade is way out of kilter, not in our favor. Nobody really knows how much the trade deficit is, but here is what Warren Buffet told The Associated Press in 2006: “The U.S trade deficit is a bigger threat to the domestic economy than either the federal budget deficit or consumer debt, and could lead to political turmoil … Right now, the rest of the world owns $3 trillion more of us than we own of them.”
The trade deficit now, nearly three years later, is even more than that, and growing.
The only thing in which we seem to lead the world any more is in consumption of goods made elsewhere.
