Tags: skarica | US | Economy | Tough | Medicine | Detox

US Must Take Tough Medicine, Then Detox

By    |   Thursday, 15 Sep 2011 10:44 AM

The U.S. government is a rather pathetic entity these days.

The current administration seems content on continuing the failed stimulus from the past two-plus years. You think they would have learned from trillions in spending, deficits and the like and barely a dent in the unemployment rate.

Stimulus is like drugs or alcohol — it is an addiction. In this case, a fiscal addiction. You pump a bit of money in the economy through government spending. On the surface it makes the economy feel better.

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As government spending is one of the calculations in GDP calculations, it makes GDP go up a bit and things seem a bit better.

However, it wears off then you crash or you get your hangover.

You have two choices: You can either decide to get sober, to cut the booze and drugs out of your life or you can just take another shot of booze and get drunk again.

Getting drunk is the easy way to cure a hangover, but at some point your body breaks down and crashes.

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This is what the government is doing to the economy. Right now, we are in the largest financial deleveraging since the 1930s. The economy needs to take its tough medicine. Consumers and government need to cut back and we need to have a tough couple of years. However, the government wants to keep getting drunk and keeping things afloat.

Therefore, Obama decides on another $450 billion of stimulus. The deficit is $1.6 trillion this year and the only reason the government can afford it is ridiculously low interest rates. However, this will be just another shot in the arm. It will make things a little less worse for a few months maybe a year then the sick American economy will get another hangover.

It’s time to stop all the nonsense stimulus. Cut spending, cut the deficit. Let the economy have its hangover. Once we get over that hangover and detox period, the economy can really start to recover then boom again. Until then it will remain stimulus drunk!

About the Author: David Skarica
David Skarica is a member of the Moneynews Financial Brain Trust. Click Here to read more of his articles. He also writes the Gold Stock Adviser. Discover more by Clicking Here Now.

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The U.S. government is a rather pathetic entity these days. The current administration seems content on continuing the failed stimulus from the past two-plus years. You think they would have learned from trillions in spending, deficits and the like and barely a dent in...
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2011-44-15
Thursday, 15 Sep 2011 10:44 AM
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