Why Obama's stimulus package won't work

This stimulus won't work. It would work for a normal recession. However, we are going into a depression. The difference is that a depression is the popping of a large credit/debt bubble. A recession is a hiccup in the buildup of credit/debt in an economy. You can cure a recession by jump starting the buildup of credit and lending to stimulate the economy again. However, using that remedy to cure a depression, that was caused by having to much credit, just makes the situation worse. Debt/credit generally takes 70 years give or take a few to build up to a level consistent with the start of a depression. I'll talk more about this in the next few days, but the point is that the last debt bubble that popped in the United States was in 1929, or 77 years from the pop of this current debt bubble in 2007. Here are some reasons why this stimulus package is only going to make things worse for the United States. The rest of this post was taken from this article:

http://www.dailyreckoning.com.au/what-we-face-now-is-a-depression/2009/02/03/



"...there is $54 billion in the bill in the House of Representatives for new forms of "American energy," a phrase with an air of nationalism, along with a series of 'Buy America" requirements of dubious legality under trade treaties; $141 billion for education; $24 billion for lowering health care costs; and $6 billion for broadband service..." etc. etc.

Colleague Porter Stansberry adds this assessment:

"Congress wants you to believe we can dig ourselves out of the financial crisis by spending $400 million to research global warming, $650 million to convert analog TVs to digital, $7 billion to 'modernize' federal buildings, and $20 billion on food stamps, etc. According to the Wall Street Journal , 'only $90 billion out of $825 billion, or about 12 cents of every $1, is for something that can plausibly be considered a growth stimulus.'"

We don't doubt that all this corruption is well-meant. Heck, who doesn't want to blow up this Depression Asteroid before it hits us? But boondogglization won't work. Because it doesn't solve the real problem - the debt. It merely moves debt from the private sector to the public sector; overall, debt actually increases.

There is about $6 trillion worth of debt that needs to be eliminated before the economy can begin to grow again. Liquidation would do it - quickly and painfully. People would get what they had coming. The U.S. dollar-based system would collapse. Everyone would learn a lesson and be better off for it.

But that could happen only over the dead bodies of Ben Bernanke and other key policy makers. Which is our preferred approach. But we are in a tiny minority. Everyone else believes that somehow some hocus-pocus will get us out of this mess without pain or suffering.