Our country is in deep do-do.
Consumer spending is down, unemployment is up, and businesses are failing. Instead of pumping $750B into various government initiatives that will be proned to politics and waste, I support the suggestion by at least one law maker to give out debit cards!
If we took the $750B and divided it among the approximately 150M working Americans, each of us would get $5,000 to spend in this economy. The governement would issue special debits cards for us to spend the money over the next 30 days (use it or lose it). This would address all three problems- increase consumer spending, help business and could reduce unemployment.
There of course may be limits on what you could spend it on. (No alcohol, medical bills, etc) You could not use it for regular bills you were behind on like utilities or the mortgage, but limit it to a downpayment on a car, or condo, or other consumer good. This would pump $750B directly into the economy now!
Better yet, for next 30 days, with the $5,000, Americans could “party like its 1999”. What would you spend your $5,000 on?
What would you do with your $5,000
Great idea! $5000 for down payments on automobiles, property and more crap that we can’t afford. Don’t let people pay those overdue bills!
That’s what got us here in the first place – irresponsible spending and debt.
How about we do nothing, and let the free market economy work itself out. Why are we giving billions – no, TRILLIONS of dollars to companies that are incapable of making a profit without government intervention?
If I want to spend $5000, I’ll work hard, save up and spend it.
Scott you have a good point, I do not think we should be giving out billions to companies that the market said should fail…but since we are in this place, should we just let a whole bunch of people suffer as a result ? it is a bit too Machiavellian for me.
I would buy $2,500.00 in shares of WalMart and Best Buy, as unfortunately that is where most of the stimulus cards would be used.
mp/m
I would utilize this found money buying things for my family and house that I have put off. Like, new tennis shoes, music lessons, rehab projects, etc. If anything is left, I might buy some stock.
@Ginna
Stock would be good but it keeps going lower every day?
Barry,
Giving out $5,000 debit cards follows the same theory that illustrates a helicopter dropping bags of money onto the streets.
The overall standard of living does not improve for 99% of the recipients, prices for the things we buy would simply rise with the influx of new money. Only about 1% of the recipients would benefit by spending the new money right-away. Those who wait will see no benefit, only an increase in inflation.
The money supply should be exactly equal to the demand of production and output. We’re in this economic mess in part because of bad monetary policy by the “Fed” and the Treasury.
The best way to put more money in peoples hands is not to print it, but rather cut taxes. Dramatic and immediate tax cuts across the board, especially for businesses is what will help get us out of this recession quicker and avert the coming depression.
@Jeff thanks for the post although I have to admit, dropping bags of money out of helicopters does have certain dramatic visual to it!
@Barry – thanks for the reply. A question in response to your question: Is it the Federal government’s Constitutional responsibility to mitigate the financial suffering of its citizens?
An unfortunate fact of life that the majority of Americans have forgotten is that sometimes things don’t come easy. Sometimes we must endure suffering in order to come out stronger and wiser in the end. Any politician who is brave enough to say that and mean it (Dem or Rep) gets my full support.
@Scott Excellent point. I think alot of people are suffering. The age old question is…how much is enough?
So what have we learned in Two thousand and sixty four years?
“The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt. People must again learn to work, instead of living on public assistance.”
Cicero – 55 BC
@David- Cicero is still revelant!
Not as deep of a comment… I’d pay off dept, then use the extra money I have every month for to bring back my housekeeper! Simple luxury that I really miss.
Hi there:
Why not let people clean things up a bit? It is still money flowing into the economy, and it gives them a sense of breathing room. I teach a money management course that has a matched savings component and the effect of helping people to see how they can create wiggle room in their budgets for saving and planning is amazing!
Mostly, I think that quite a few people ought to have gone to jail by now for their role in this fiasco. If as many people were attacked by guns or bombs as have been attacked by the financial weapons used in creating this mess we would be handling it very differently.
Why should people be waking up feeling desparate every day through no fault of their own?
Those billion dollar bonuses would have paid a lot of $30,000 per year salaries to back-office staff and others who support the industry with their labour.
I like the helicopter dropping bags of money idea…
@Anna
We would need a big helicopter :-)
[…] Moltz, a popular blogger and author, wrote a very interesting post on what Obama should do to stimulate the American Economy. Here is what he suggests: If we took […]
This was actually proposed on CNN. In the exact same terms. The problem is it doesn’t fix the housing crisis. It doesn’t create equity in homes. Not a good idea at all and very economically unsound. It is a recommendation from someone that does not understand economics. It is very temporary and short lived. If I gave an unemployed person 5,000, would that solve his problems. NO.
@Tim
Never claimed to understand economics but the $5000 solution can’t do much worse than pumping money into banks and AIG!
Barry, I love 99.9% of your ideas and your heart is in the right place, but giving out money, the 5k, is not even close to a solution. Yes, giving money to banks is 10x better for the economy because without credit, loans, financing….the market crashes much worse unemployment will shoot up to 20%+ and it is a long term depression. The reason the Gov. decided to put money into the banks, is it is a viable solution. Giving everyone 5k doesn’t do a thing. Nothing!
@Tim
Did you hear the Jay Leno joke when the government gave out debit cards to people from Hurricane Katrina?
“The debits cards where used for things like beer and lapdances- and the rest of the money they wasted!”
HA! Thats hilarious!