Comments and observations on social and political trends and events.

Saturday, January 17, 2009

Obama's "American Recovery and Reinvestment Plan"

The World Tribune has an article titled “In the propaganda department, Obama's linguists are leaving Republicans in the dust” that is written by Cliff Kincaid, of Accuracy in Media (a conservative media watchdog group). Buried in this article is a short quote from Peter Schiff of Euro Pacific Capital who offers a warning and a nice, concise explanation of the folly of government spending our way out of the current recession.

[He] warns that a proposal of this kind is comparable to an individual trying to “forestall a personal recession by taking out newer, bigger loans when the old loans can’t be repaid.”

He explains, “Governments cannot create but merely redirect. When the government spends, the money has to come from somewhere. If the government doesn’t have a surplus, then it must come from taxes. If taxes don’t go up, then it must come from increased borrowing. If lenders won’t lend, then it must come from the printing press, which is where all these bailouts are headed. But each additional dollar printed diminishes the value of those already in circulation. Something cannot be effortlessly created from nothing.”

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