The Stimulus Scam

Read the excellent article on mises.org about how stimulus spending creates fake economic growth and new economic bubbles. Here’s an excerpt:

There is general agreement in the economics profession that the much-vaunted expenditure multiplier of Keynesian theory has quite different real and monetary effects depending on the state of the economy. However, the negative impact of stimulus policies on productivity is much less understood. When the economy expands due to fiscal or monetary stimulus, the productive capacity of the economy will actually decrease because the artificial expansion will mainly encourage malinvestment, i.e., the pursuit of business projects that are not viable in the long run.

Sound familiar? How about solar energy, bio-fuels, and wind farms for instance? How many tax dollars have chased theses ‘green’ energy projects and what do we have to show for it? Here’s something to consider, wouldn’t it make sense that if these forms of energy production were viable that they would be in ubiquitous use without government subsidies?
The once booming solar industry in Europe has collapsed as subsidies dried up and the same thing will happen here. Spain, a big investor of tax dollars into solar energy production, has been especially hard hit. As tax revenues dried up with economic slowdown, so did demand. Brand new solar energy panel producing factories less than 5 years old are now closed and shuttered.
This type of bubble is a product of false demand created by government intervention in the economy. With all of the money that has been spent in stimulus in this country in the last 3 years, is there any doubt that more bubbles have been created? Hopefully, you don’t find yourself sitting on one of them when it bursts.

-OMB