Opinion: Why the Stimulus Will Fail

Those who cannot remember the past, are condemned to repeat it.
-- George Santayana

As the U.S. government embarks on creating the most reckless expansion of our country's debt and currency since World War II, a little bit of historical reflection seems appropriate. This "stimulus" as they're calling it is nothing more than a massive giveaway to politically connected interest groups that will do nothing to create any real growth in the economy or lasting job creation.

In fact, it will further destroy growth and jobs by fueling inflation and higher interest rates. The effect of the stimulus can be summarized best by reversing and paraphrasing Winston Churchill's famous statement regarding the Battle of Britain, "Never in the field of human conflict was so much owed by so many to so few."

What does that mean? Put simply, that the stimulus will harm most Americans who have jobs, own businesses, pay taxes, and save money. That's what happens when you create an environment of rising interest rates, higher inflation, declining currency value and enormous future government debt to repay. The recent deficit projection for 2009 is nearly $3 trillion and will probably end up higher than that because of lower tax revenues and higher government expenditures.

The entire U.S. economy's GDP is about a $13 trillion and will probably end up lower than that because it is shrinking. At some point if this continues, we could get close to the government spending more than the entire country is producing. Does anyone really believe that this is sustainable? Of course it isn't, but ignorance is bliss, at least for a little while until reality sets in.