The Bailbondsman Approach Part Deux: Fiscal Stimulus No Gonna Workie

This is perhaps the first time in the history of blogdom, that someone will have used "Uncle Ben," in two different contexts in back-to-back blogs, that is unless you're a rice blogger and you have a real uncle named Benjamin.

The "Uncle Ben" I refer to is our new Chairman of the Board of Governors for the Federal Reserve Ben Bernanke. Even while supporting the stupid -- I mean Fiscal Stimulus Package that he had to support because the guy shilling for it gave him his job -- rebate that the government is giving us, he warned that any stimulus that "comes too late will not help support economic activity in the near term, and it could be actively destabilizing if it comes at a time when growth is already improving."

It's the first part of that thought that I find particularly striking. This $300 to $600 to "up to" $1,200 that some of us will be getting sometime in May or June or in many cases, never, is like the "Micky and Pals" brand Band-Aid over the gaping gun shot wound. Take these few C-notes, head off to Wal-Mart, then we'll be able to get these people whose houses are foreclosed back into those houses and everything will be dandy.

Wrong. Dead Wrong

If anything, tax rebates should be put into individually assigned savings accounts that we're not allowed to touch and then the amount should be able to collect interest for us. The account will then have a balance that the government can borrow against to put in place real safeguards for the economy and environmental stability like a viable healthcare system, infrastructure improvements, respectable national transportation, a bailout perhaps of the common man and not the common investment bank. I know it's pinko communist talk but these are ideas that in the long run would save us the money we're spending and would be put to better use than a new I-pod to offset $10 Trillion in rogue credit default sway and derivatives contracts, still floating around Wall Street.

The reason Pay Day Loans are legal and thriving, the reason credit card debt is up, the reason people now find themselves on the opposite side of the threshold from homes they couldn't afford in the first place is temporary fixes. Stopgaps and living paycheck to paycheck is a sure way to not be able to leave anything to your kids and find yourself working extra hours or another job entirely because you're deeper into debt than you were before.

The government is essentially giving us money it doesn't have so we can spend money that some of us don't have and that's ours in the first place. Moreover, the one thing they don't tell the people is that for every person getting a check, there may be people who owe and we'll see their rebates eaten up, or people who haven't filed in a while and won't be getting a dime. There are also certain income stipulations, which determine if you are even eligible. So suddenly the $150 billion goes down to maybe $100 billion and with the money and resources spent processing these meager checks, maybe down to $95 billion.

As I've espoused before and will emphasize again - as I'm wont to do in a blog suited for such a purpose - it's necessary for us to think differently about our wants and needs and our purposes and the real-world applications that accompany them. The government is telling you to live beyond your means so you can continue to support it living beyond its means.

Conservation is not just an environmental buzzword, it applies to our pockets as well. If we were all to decide to put that money in the bank instead of right back into the machine, maybe that would send a message to our leaders that we want to be a country of makers again and not spenders, a country of prudence and not waste.

It starts with all of us as individuals. Now go check your mailbox and check yourself while you're at it. 

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Guest's picture

The first thing I thought of is it sounds a lot like using your visa to pay of your amex and then using your amex to pay off your visa, etc. Sure, in the short term you're ok, but at some point a giant debt monster is still going to show up at your door. But, by the time he does, the debt will be that much bigger.

We had to pay taxes this year - grrrrr. So our check will just go to replace the tax money in savings. Otherwise, it would have gone to a vacation somewhere, or 1/2 to vacation and 1/2 to savings. I think it's important not to look at this as an all or nothing deal, come to think of it. I think some or all of it should be saved, but if you get $600, there's no rule that says you either have to save it or you have to spend it. So, take $100, do something fun, and put the remaining $500 in savings. Although, if you're serious debt, I'd say swing it all over to debt payment, you never really had it, you'll never miss it and you'll be super happy when those debts are paid off that much sooner.

Guest's picture

For those of us who already know how to handle our finances, you're preaching to the choir.

Otherwise for the rest of the population, I don't see America changing it's ways. In general, we Americans are a short-minded lot.

6 months out? What the hell is that? I'm looking forward to Friday (payday).

I can't wait to get my $600. I'll be heading straight to the casino and putting it all on black. Yes, I did well in probability class so I know that I have a 47.37% chance of turning my $600 into $1,200. Then, (if I win) I'll take the money and spend it all at some club with bottle service and surround myself with hot party chicks for a weekend of debauchery.

Forget that saving and paying down your debts crap! I say, George S. Clason can stuff it. Blow your $600 on something you want NOW. That's the American WAY! :)

Jabulani Leffall's picture

Totally, mark, I agree, and I think the purpose of Paul's post and to an extent this post is to holler at the people who know they're wrong. Heck I know several people who said they can't wait to get that new LCD screen or go to Vegas and granted it's the individual's perogative to do so but when these same individuals come to comprise the collective, it looks like we're in trouble. And unfortunately, people who need to be reading this are watching "The Hills," 


Jabulani Leffall

Monetary Gadfly, Common Currency

00000 Broke Blvd. Kitchenette #68 & 1/2

Lowcash, CA 90000-0000

Guest's picture

Thank you - i couldn't have said it better, mebrudda.

Guest's picture

It's so frustrating because we owe this year, so we really won't be getting a check.

I'm a little confused by your blog though because we are in America, and this is what America is all about!
The government spends beyond its means and American's do the same.

Will this ever change? I doubt it, although some say in 10 or 15 years we'll be looking back and thinking "Wow, we had it good."

Guest's picture

Well said! 'Course the current federal gov't seems hell bent on driving us all to the brink, one way or another. Makes me, and most sane folks, crazy.
Personal gripe: We'll be getting the $1200 back, but since our kids are college-aged, and despite our still supporting them, despite having to take out loans for their education, we will not see the extra $ for them. One of them MAY get a rebate, since he worked last year, but he got "dinged" already since FAFSA thinks he should put all his money towards college tuition, and NOT be recoginized for being responisble enough to get a job and allowed to use that money for personal expenses. UGH!

Guest's picture

Your rant leaves much to be desired, it really doesn't make much sense. Except when you state, "I know it's pinko communist talk". Yea, that it is.

Unlike you, I dislike being told what I have to do by other people but, especially, by the totally inept government. Without your help, and certainly without the help of incompetent bureaucrats, I'm doing just fine.

Please leave me alone!

Guest's picture

See, you're exactly the person who needs to get this message, and a boot upside the head. What Jabulani's saying, and what the government's saying (or are expecting) are totally opposite.

This stimulus package is a a mind-game they're playing. They're giving us some funny money to pump up the economy long enough for a longer-term economic upturn to kick in at the end of the year.

What they are hoping is to delay that moment when people feel really crappy because something goes wrong: a job is lost, there's a temporary layoff, businesses close, banks fail, whatever. With that delay, people won't be bummed out and holding off on spending for more than a few months, so their unemployment benefits won't run out, and it won't become "malaise".

Like Jabulani, I'm a cold-hard-facts guy, or try to be, or at least I try to appreciate the occasional slap-in-the-face to get me in gear. But most people aren't like this. Nope. Fatnhappy, richnlazy, unabletosave, or whatever, they're just going along.

They don't have the means to survive the pain of a recession. So they could be the first domino to fall, to put fear into people, and cause an extended period of consumer loss-of-confidence. Then we enter into a period of overproduction, or extended unemployment, and then price depression.

So, while my personal behavior is closer to the authors, my thinking is more along the lines of our deceptive government. People need to feel some pain, but not all at once, and not in such a catastrophic, collective way.

Then again, maybe not. A severe downturn would be a boon to communist organizing -- our far-left sects would see an uptick in membership as people find themselves eviscerated by the system that they have trusted for so long.

Jabulani Leffall's picture

Heck, you da person for setting that one guy straight, no one is telling anyone what to do. I think the big problem is that a lot of Americans say they don't want to be told what to do but boy are they suckers for being sold something. If they're sold a bill of goods or a high interest loan or a bad stock or a burger that's bad for them or a quasi Keynesian shot in the arm, they'll go for it if it has good theme music or fancy wrapping or has t he word rebate in it. For all the anti-reds out there, what do you think the Federal Reserve buying into a private enterprise to keep it from failing is, or better yet what do you think this fiscal rationing is? And while you're whisltling dixie and singing the star spangled banner, the government is selling your kids' future to the communists. How you like them apples. Yeap China's currency resever just went up to $1.7 trillion and having just gotten back from there I can tell you they ain't buying subscriptions to Maxim, they're gearing up for this to be their century. This is America and I don't want to tell you how to spend your money at all. But I would be unAmerican to not try to be the Paul Revere of bloggers and tell you that somewhere down the road, the redcoats are coming.


Jabulani Leffall

Monetary Gadfly, Common Currency

00000 Broke Blvd. Kitchenette #68 & 1/2

Lowcash, CA 90000-0000

Guest's picture

Ive been ranting about this since it first came up: this is no tax rebate, its deficit spending. Its just more we/our kids/ grandkids will have to pay back in the future.

Guest's picture

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Guest's picture

One of my issues with the way the economy has gone is that what is "good" for the economy is not necessarily good for most individuals. Our debt-based economy is such that it is "good" when Americans carry balances and have enough debt that they can't get out of it, but enough that it crushes them. With the subprime mortgages, that line was pushed too far.

At any rate, I agree that what would be best for the INDIVIDUAL is to sock it away into some savings. Or at least pay down some debt. But the government just wants us to spend, spend, spend. And really, "they" are hoping that you'll use your tax rebate as a down payment on something bigger.

Another thing to consider: Where is all this money coming from? It has to be borrowed. We'll be paying it back with interest down the road.

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