Friday, March 18, 2011

Economic Stimulus and Stress

I was reading this when I decided I must advance a hypothesis I had been considering for a long time. The reason I was reluctant to advance my notion was basically due to the fact it would challenge almost all economic thought since John Maynard Keynes. Here is the basic hypothesis:

Economic stimulus has immediate advantage, but long-term hazard. Inputs of stimulus create economic elements which are foreign to market forces, and destabilize the economy in later economic performance. The major way this occurs is by altering the exact position of Stress, and the magnitudes of the Stress imposed. The Result creates economic elements not naturally joined to economy, reacting to different variables of Stress, but which can impede natural economic recovery forces by insistence that such economic elements be fully-funded and functional.

The whole is similar to building a House of Cards. We do not now possess a natural economy. The later is much smaller than what We have, but must fully fuel the mess currently considered the economy. We have a vastly expanded Government, containing among other things, a vast assortment of regulatory agencies and labor. The later must be paid on a par with their natural economy counterparts; think here all economic sectors cannot only be accounted by the labor force engaged in the industry, but also the regulatory agents to supervise the industry; again think of the Labor Wage Costs for the industry to include both labor force and regulatory agent salaries. Other elements of Government include National Parks, Reserves, Monuments, and Cemeteries–all of which Wage Costs must be paid. Unemployment Insurances Costs must not only contain unemployment benefits–but salaries for the management of the system at all levels. Government will not order specific payment of specific bills in health care, it accepting both Private and Public employment for no other reason than challenging the bill payments after Review; all costing both in Insurance premiums and health care Costs. I will not continue into the massive Hiring by Government for projects and programs almost without Number; all of which must be financed by the natural economy.

Every advent of economic stimulus not only adds to the mess, but it further makes the entire situation Top-Heavy. Intervention always creates Stresses unexpected within the entire economy–both natural and artificial–on a structure more subject to collapse. We are now at the Stage where We are manipulating the Money Supply itself because no one can conceive of major actual economic expansion intervention and stimulus. The Money Supply, though, is the seeming only connection between the natural and artificial economies through Wages, Rents, and Profits. Now We are introducing Stress factors into the Money Supply, with no economic agents being sure of the actual payments they receive; which may or may not be worth the Sale of economic assets within the market. Has Anyone asked what happens if the Money Supply actually collapses through Stress? I imagine that We have a second Great Depression if the Inflation rates reaches the mid-Teens, and it is not a prospect I can readily enjoy. lgl

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