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Our government is preparing to pass something called a stimulus package. According to the experts, this stimulus package won't directly stimulate much of anything in the short term, when we need it. But with any luck it will bamboozle a hundred million morons into thinking their government did something useful, and that in turn will cause them to become more confident and spend additional money on cigarettes and lottery tickets, thus stimulating the economy.

The funny thing about this scheme is that it might work. The other funny thing is that no one is trying to hide the fact that the entire plan depends on bamboozling the aggressively ignorant portion of the population. We need to get those bozos spending again, and if it requires a fraudulent stimulus package to get it done, most people seem okay with that.

This is yet another situation where smart people are ironically incompetent if left to their own devices. If the world were populated only with the smart and well-informed, we'd all sit around waiting for someone else to spend money first, so they can take the highest risk. Eventually society would crumble and all of us geniuses would be eaten by rats. But if you throw a bunch of clueless bastards into the mix, suddenly the economy is supercharged. Money is flying everywhere, confidence becomes warranted, and the economy flourishes.

Our past economic booms depended heavily on morons. Those wonderful stimulators of the economy had to buy stock in perpetually unprofitable tech companies, or invest in real estate after it was clearly overpriced. Every economic boom is powered by the clueless. I see no reason why the next one should be different, except that the government is doing the bamboozling this time.

I plan to do my patriotic duty by no longer following the news coverage of the economic stimulus plan. This will allow me to imagine that all of the pork and special interest garbage will be removed from the final bill that gets approved. I will blissfully assume that the economic stimulation will be short term and effective. Oh, and long term and effective too. And then I, and my fellow ignorami, will spend, spend, spend our way out of this slump.

You're welcome.
 
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Feb 10, 2009
The morons spending profusely, is what got the US economy in trouble in the first place. The whole problem was compounded by bankers willing to lend money to the said morons.

The idea that an economy can grow perpetually will be proven wrong at some point....
 
 
Feb 9, 2009
I'm just waiting it out for another world war, it worked us out of a jam the last time. Maybe now is a good time to take on Iran. And Russia's been acting kind of sketchy, I'm not so sure about that Putin guy. Anyways, lets fire up the factories and start making guns!
 
 
Feb 9, 2009
Which reminds me.. Does the probability of winning a lottery ticket go up during a recession.. If so, by how much
 
 
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Feb 9, 2009
Brillance, Share brillance . . . . . . . .

The scary part is that . . . . I think he could be right . . . .
 
 
Feb 9, 2009
Why are we always blaming the bankers and investors? The real villains in this economy are the appraisers who continued to value real estate higher and higher. That's why we have trailers on a 1/4 acre dirt lot going for $200,000 in my county.
 
 
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Feb 9, 2009
This must be a DMD post. I would never expect Scott Adams to write something to intentionally dumb unless he were being entertained by the responses.
 
 
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Feb 9, 2009
Scott,

Just have to look at the _multiplier effect_ of stimulus or other plans. If you want short term ineffective change, just paradrop wads of cash into the street. In recession one day, and back to normal the next? I think not. The entire market mood must be increased, the banking system needs total reform, because people are losing jobs, and you can't expect them to be made back tomorrow. There is a bottom line of benefits, but the economy won't grow with increasing numbers receiving them. The stimulus package hits a new foundation (God I sound like Obama) , new companies, hopefully followed by new jobs, and new money creation. The thing I don't realise is how people don't see this, and are angry to day to day events such as bankers bonuses for example (stupid Brown) . There is no such thing as quick fix when something is so fundamentally broken as it is now.

In a bull market, of course any idiot banker would look like a genius generating their returns, but look now, today, they don't look so clever now. Is there any way to predict when the next boom or bust will be?

Anyone thought about a bit of communism, just like China has chosen to insert a bit of capitalism into their economy. It worked for them.

DMD
 
 
Feb 9, 2009
To MarkTwain,

I hate to burst the bubble, but that fractional reserve system is exactly how our banking system works. It works very well if--and this is key--if everyone makes good on the loans they get from the bank. If the bank makes a risky loan & it doesn't get paid back, it can usually cover itself with its other assets. But if lots of the loans (think "sub-prime") don't get paid off, well, as you have observed the bank is in serious trouble. It might evel collapse and take people's savings with it. This is exactly what happened with the subprime loan crisis, and it is the major reason why the banks are just sitting on piles of bailout money instead of making lots of loans right now. So in answer to the question of where the money comes from, it really never existed in the first place, but in some sense it comes from the people who owe money to the bank.

By the way, in addition to setting interest rates, the Fed sets the reserve ratio for the banks. Most banks are trying to keep significantly more cash on hand than this minimum requirement calls for right now. This is a way to reduce the amount of risk the bank carries. It is also the reason for the so-called "liquidity crisis" (now you have to make a bigger down payment and have especially good credit to get a loan). Requiring the banks to make more loans--one proviso the president has called for that might be in the stimulus package--is liable to make an even bigger mess out of things right now.
 
 
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Feb 9, 2009
Too late. They are already bamboozled because they just lost job. That was enough to overflow their tiny buffers and now they will just stare blank. You are doomed....
 
 
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Feb 9, 2009
One more quick point on China. This is an interesting article.... http://www.theaustralian.news.com.au/business/story/0,28124,24738952-643,00.html. It points out that many people think this crisis just kinda happened, all internal screw-ups with no external drivers. But China (with India and others) has lifted about 20% of the word's population out of abject rural poverty into the world of dishwashers in just 25 odd years. Some of that extra cash went to funding silly US housing loans. So while the rest of the world sits back and blames the stupid greedy Americans for all our problems, maybe some of it was because of the fantastic but scary progress made by ordinary Chinese.
 
 
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Feb 9, 2009
To Mark Twain - you're going to borrow the money from China, that's why the buy America idea is really, really stupid. Particularly as they're also thinking this might be a good time to finally fix those roads and build some hospitals, like everyone else in the world.

I think a country's like a big company, where the revenue stream comes in taxes. When times are good, you get more income, times are bad it goes down. So in bad times you decide - do you increase the price of your product or decrease to bring in more customers? Or maybe you make some investments in the factory to make your product more efficient. Maybe even close it for while to finally sort out that asbestos problem threatening you with future lawsuits. Or do you do nothing and try and ride it out?

Plus you have to keep the workers happy. They'll be looking at the similar company down the road and going hang on, they are *WAAAY* better off than me. Sure I'm desperate for a job today, but tomorrow when things are better, man am I going to be joining that union or what.

Sounds complicated.
 
 
Feb 9, 2009

Ok, I have a question for the "Iacopus Caesar" poster, and his "fractional reserves" idea. If banks can loan out 9 dollars to every 1 dollar they actually possess as a deposit, where exactly is this other 9 dollars coming from that they are loaning out? Thin air? Isn't that about the same way the federal reserve operates, creating money out of thin air ?
Dude,,we are soooo screwed!!!!
 
 
Feb 9, 2009
the idea that the stupid are a group to exploit is wrong.

whether someone is fat, short, ugly, stupid, or a white male, there should not be groups that are acceptable to give the short end of the stick.

this is the same attitude of the landowners who ruled the serfs. why is the life of excess possible? exploitation of the many.

that is something everyone who buys from china should consider. buying 'made in china' makes chinese slaves lives possible. our own version here is the banks who own the land and make us work to pay off a lifelong mortgage for an essential part of our lives. its indentured servitude.

america is the top of the food chain, yet that does not justify the gross usury exploitation of our lower income citizens.
 
 
Feb 9, 2009
Hey Mr. Adams,

Here's an idea--a bit unorthodox, but here goes: It is actually *better* for the economy as a whole if everyone saves as much as possible.

Here's why: When people save their money, where do they keep it? A few might keep it under their mattresses, but most people put it into the stock market (right now not so hot) or other investments or the bank. All of these put money *into* the economy, rather than take it out--stocks give money directly to corporations that need it, bonds fund government debt incurred by such things as the war & stimulus packages, and putting it in the bank also funnels money into the economy, actually more so than withdrawing the money & spending it. Here's why: The money in your bank account is used to loan money to deserving people & businesses at a higher interest rate than what the bank actually pays you (this is how banks make money). But here's the kicker: fractional reserves. Banks actually loan out more money than they have on the books in their savings account. A 10% reserve ratio means that for every $1 you have in your savings account, the bank can loan out that one *plus* an additional $9. If you withdrew that $1 and spent it, it would only be $1 making its way through the economy--with the multiplier effect, ~$1.25. This reserve ratio of 10% maginfies that $1 into $10 for the economy at large--and when the multiplier takes effect on that $10 it will be about $12.50.

Bottom line: Saving creates more money for the economy, by at least a factor of 10, than reckless spending. And it doesn't involve inflation.
 
 
Feb 9, 2009
Timing is everything. One of "us geniuses" manage to miss today's date on his cartoon by a year. Whoops!
 
 
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Feb 9, 2009
Because of easy money we have been spending too much. The madness must stop.
 
 
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Feb 9, 2009
An article in the Economist recently talked about saving. Americans need to save more - right now, they save less than 1% of income. In the Eurozone, it's much more (9%). What would happen if Americans suddenly started saving 5% of income? Answer: massive worldwide recession, particularly in Asia.
 
 
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Feb 9, 2009
Oh, and Phantom...seriously dude, learn to edit your pontifications would you? Can focus that long to read your dribble that I am sure you find is remarkably clever...yawn
 
 
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Feb 9, 2009
Wow! Who would have thunk it? Scott Adams listens to Rush Limbaugh! LOL

Seriously though, you can't make this stuff up this good...we are so screwed that we might actually come full circle and spend our way out of this? Impressive. Maybe Mr. Obama can walk on water...
 
 
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Feb 9, 2009
If that's all it takes, why not just spend (and say we'll be spending) $8.19 billion instead of $819 billion? I'm sure that $8 billion would still sound like plenty to all the ignoramuses upon whom this scam depends!!
 
 
 
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