Stimulate this!

How can the government stimulate the economy?

It doesn't make money by running a successful business. Instead, the government gets its wealth from taxation and its very own printing press. Unlike a business, how well the government performs is irrelevant to the amount of money it can spend.

The current stimulus package is going to pump billions into the economy. However, since the government has no money available, due to massive debt, they need to come up with the money some other way.

Borrowing the money is an option, but since the debt has to eventually be paid back, the money has to come from either taxation or through printing the money.

In order to pay for this stimulus through taxation, the government has to take money from the private sector and redistribute the wealth as it sees fit. The private sector operates on a profit and loss system unlike the government.

In order to survive as a business, you rely on creating things that are in demand, making them valuable. To stay in business, they must compete with other businesses to meet the needs of customers. Whoever can meet these needs the best will be the most successful.

So businesses are forced to be efficient and create goods in demand. The government on the other hand, is completely different. It doesn't require efficiency or meeting the needs of customers.

Instead, it just uses taxation. If there's a new public works project to build in a bridge, the money must come from the private sector. Whether the project is in demand or not is irrelevant.

The project can be completely worthless, but since the money doesn't come from successful business decisions, the project can still be completed.

So these government projects may give us jobs, but it takes away wealth from the private sector to do so.

The second way for the government to fund this stimulus is to print the money.
In order to understand why this is such a bad idea, people need to understand what money is.

Money is a medium of exchange, it is not wealth. Rather than bartering with each other, we use a medium of exchange so that transactions are much simpler.

Our money is paper, nothing more.

So how exactly would printing more of our medium of exchange fix our economic crisis? It wouldn't.

Nothing of value is created. The only result is the increase of prices and the devaluation of all of the money we have earned in the past.

Government stimulus does not exist. It is an attempt for politicians to make certain people happy in a Keynesian fashion. It is political suicide for a politician to do nothing in an economic crisis. Whether the policies are helpful or harmful is irrelevant. People want action.

Tell us: Does this make sense? What do you think should happen to the economy?