The Online Investing AI Blog

Daquella manera@Flickr

Stimulus packages, like the colossal one hoisted on Americans in the midst of an economic panic last year, is the perfect macroeconomic analogy to the microwave mentality.

We want our answers to be super hot and super quick. And we want them to require minimal effort. Except that, these quick answers, just like the nutritional value of some of those microwave meals, might not be as satisfying in the long run.

Instead of designing a designing a budget that trimmed excess and promoted long-term growth, the government did exactly what it’s been warning citizens not to do: rely on credit.

Look free money! You could almost hear the government shout when they announced the plan. Although the panic is behind us, the pain and payment of the stimulus may just be starting. The bill, as a matter of fact, is beginning to show up in several unexpected ways.

• The dollar is weaker, which means oil prices will be higher. Each pump of the gas is a little payment for the stimulus.
• We’ll also pay with tighter control and regulations. And, once a government seizes power–no matter how justified–it’s loathe to let go.
• Higher taxes will be another result. Long after the payment is made, bureaucrats will insist that the bigger tax bill will need to remain in place.
• A return to the bubble and burst economy is another way we may end up paying for the stimulus funds. Creating excessive, artificial demand without addressing supply is one way to create a market bubble.

Just like the free puppy costs money to maintain and the short cut through the woods leads you into swamp, the huge stimulus could turn into a giant mill stone around the neck of the economy.

Related posts:

1. 300 Million Sandals: How The Stimulus Bill Hurts The Economy
2. Why the Stimulus Bill May Not Help
3. Stimulus Program… Or Austerity Program
4. Why The Economy Will Crash (Again)
5. What Will–or Won’t–They Tax Next?

Related posts brought to you by Yet Another Related Posts Plugin.