The problems with stimulus packages are manifold. The primary reason they fail is because they do not address the roots of the problem. If you are unable to identify the cause of your problem, then your solution is doomed to fail.
In the case of the current economic crisis, it had its root in loose monetary policy and easy credit that skewed the allocation of resources within the economy.
Combined with other measures to promote home ownership, these easy money policies caused a massive housing bubble. Money that would have been put to other uses was used to produce raw materials, hire workers and loaned to homebuyers, all while home prices spiked.
The boom was, of course, unsustainable, as many prognosticators pointed out during the housing bubble's peak. But the damage was done, and now that the bubble has burst, we need to stand back and allow the mess to unwind. Yet the government does everything in its power to stave off true recovery and is attempting to re-inflate the bubble...
The government likes to tout the number of jobs that have been created or saved by the stimulus. But even if these numbers are accurate, they do not count the number of jobs that are not created in other more productive or self-sustaining sectors of the economy. Nor do they count the jobs that will be lost in the future when tax rates will have to be increased to pay off the interest on the debt that is financing much of the stimulus package.
Ron Paul gets economics. It's that simple. Now, who will listen?
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