Stimulus Packages vs. Wealth Creation, Part II

In Part I of this article, I discussed how the creation of surplus wealth leads to an increase in manufacturing plants and equipment, which in turn leads to the creation of both new jobs and new products. This stimulates economic growth and, in general, improves the well being of people who work for a living.

But what if businesses don’t reinvest their profits? The fact is, surplus wealth leads to growth even then. Suppose, for example, that a man builds a successful business, then “cashes out” for $10 million. He has no desire to produce anymore; he just wants to enjoy life. How does his life of luxury in retirement help the economy?

Well, if he buys a car, he helps to employ autoworkers and automobile salesmen. If he takes a vacation, he helps to employ hotel personnel, airline employees, and luggage factory workers, to name but a few. If he builds a mansion, he employs, directly and indirectly, a wide variety of laborers and service providers.

If this mythical individual puts most of his money into stocks, bonds, and/or savings accounts, he stimulates the economy by making capital available to other businesses. Even if he stashes all his money away in his home, he still requires certain products and services to live.

No matter how you slice it, surplus wealth stimulates the economy. The greater the surplus wealth, the greater the chances that those at the lower end of the economic scale will begin to reap benefits. (Yes, money really does trickle down! Sorry, libs, but there’s no way to stop it.)

The important thing to understand is that wealth cannot be created out of thin air (i.e., paper and ink). Only productive effort can create television sets, refrigerators, automobiles, and houses. What we erroneously refer to as money today is not wealth. It is part of a government scheme to invisibly tax the uninformed public. The more paper money the government prints, the less your paper money is worth.

Those GAVEC-driven cases on the left may not like to hear it, but the reality is that you cannot have more without creating more. There are no magic formulas for creating wealth, though the gullible public has been disastrously led to believe otherwise.

The income of the people of a nation must not exceed their output (i.e., what they produce). If it does, the nation experiences what is known as “false prosperity” — a phenomenon Americans have been enjoying at an ever-increasing level for decades. But make no mistake about it, it
is false.

Outfits like Whole Foods (with sales and profits now in free fall) and Circuit City (bankrupt) built large companies as a result of this false prosperity. But when reality hit, millions of their customers who had been addicted to discretionary spending began to disappear.

When you find that your higher income today buys less than your income of five years ago, you are living in a country that is being deluded (and destroyed) by false prosperity. You are living in a country where the combined income of the population exceeds their total production of goods and services. You are living in a country that is courting economic collapse and inviting a dictator to grab hold of the reigns of power.

Let’s get real: When output increases, real income (i.e., income derived from productive effort) increases. When output decreases, real income decreases — no matter how much more “money” people receive.

To summarize: Printing up pieces of paper, calling it money, and telling the public that it will “stimulate” the economy is a monstrous lie. The trillions of dollars that are going to be handed out in the months and years ahead is certain to destroy what is left of the U.S. economy.

Those on the left can be excused for their part in this act of national suicide, because they have a sincere belief in the goodness of collectivism and the badness of individualism. That’s right, no matter how immoral or ignorant their beliefs may be, they actually believe in
something! But what excuse can congressional “conservatives” use when they continue to support a socialist agenda disguised by euphemisms like “stimulus package” and “shared prosperity.”

Either they know better, but are “reaching across the aisle” anyway, in which case they are cowardly and immoral. Or they really don’t understand what they’re doing, in which case they are either stupid, uninformed, or both. Whichever it is, I think we can all agree that it makes them unfit for public office.

Think about that when the 2010 elections roll around. If you’re one of those people who believe that your congressman is doing a fine job (bringing home the bacon), I can pretty much assure you that you will continue to get the government you deserve. If your congressperson voted for one “stimulus package” or bailout, it’s your patriotic duty to cast your ballot for his opponent.