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Jfkfan
Jfkfan
Stimulus Plan
Jan 10 2009, 11:32 AM EST | Post edited: Jan 10 2009, 11:32 AM EST
so what do you people think abou obamas new stimulus plan? will it help us ? or hurt us more? Do you find this valuable?    
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Petros_Houhoulis
Petros_Houhoulis
1. RE: Stimulus Plan
Jan 19 2009, 8:03 AM EST | Post edited: Jan 19 2009, 8:03 AM EST
"so what do you people think abou obamas new stimulus plan? will it help us ? or hurt us more?"
Well, there are two paths down the road.

The first is to be fiscally conservative for the sake of the future, and slash spending as much as you can, while you tell the U.S.American people that they have to buy less foreign products and reduce their dependence on foreign money. That would certainly be good in the long term. This was followed by Herbert Hoover, and turned out to be a disaster.

Obama chose the other way of increase spending and ignore the long term consequences, favouring a short term revival, much like FDR.

The similarity of his ideas to those of FDR do not guarantee success, especially in the long term, but...

...In the short term, if you followed the first path, you would have to deal with high unemployement, wide popular unrest, high crime rates and a resurrection of the Mafia, and much more that would effectively diminish the productivity of the U.S.A. since everybody would be running for cover rather than produce better.

As you know, any nations' debt is calculated in relation to its' annual GDP output. It makes sense because if the U.S.A. had the productivity of an African nation, it would be bogged in debt forever, while, if any African nation had the GDP of the U.S.A., it would have repayed its' debt very quickly.

Thus, reducing the GDP output is like increasing the debt, therefore neither the first path of Herber Hoover is very sound in the long term.

Of course, at FDR's time it was still possible to raise the GDP output to the point that the debt was dwarfed, but nobody can guarantee that it can be repeated today as well. Thus Obama has a huge challenge.

Of course, the only path that he could chose is the second path of FDR, since it was proven correct before, but any sort of success in the long term shall have to rely upon a reduction of the schism between poor and rich in order to decrease public discontent and subsequently crime... 2  out of 2 found this valuable. Do you?