Sunday, July 4, 2010

Pelosi's Sheer Economic Folly

In one of the most boneheaded comments I have ever heard, Nancy Pelosi claims that unemployment checks are one of the best and most immediate means of stimulating the economy:

She even falsely claims that economists believe this also.

Let me first say that anytime a person loses their job, they are a drag on the economy. Their job loss degrades it because the person losing a job suffers a substantial net loss in their purchasing power; and, it is a high rate of consumer spending that primarily drives 70% of our economic activity and growth. The only thing that any unemployment check does is to moderate the degenerative effect of a job loss on the economy. It doesn't stimulate it. If what Nancy seems to think was really true, it would only make sense that we could have a roaring economy if everyone was unemployed and everyone was receiving a check from the government. Of course, if that was the case, we'd look a lot more like Cuba or the old Communist Russia than the economic powerhouse known as the USA.

Anyone with half a brain knows that, as the unemployment rate goes up, an economy generally moves into a recession; followed by a depression if the amount of unemployment isn't curtailed. Unemployment is a drag that actually creates more unemployed because the unemployed, at best, can barely keep their heads above water by only being able to pay their essential bills. Any unemployed person, despite receiving a check, is more likely to lose their home or go completely bankrupt when they can't keep up with their financial obligations. Any stimulative effect of their using excess disposable income to buy non-essential goods is almost non-existent.

It's this kind of stupidity that produced the failed stimulus package. The only unemployment that would be good for the sake of our country and our economy would be to dethrone Nancy Pelosi as the Speaker of the House by erasing the Democratic majority in the Fall elections. That's the kind of unemployment I can get behind!

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