Thursday, January 24, 2008

Stimulus

To stimulate one of the world's most robust economies at a time when all major economic factors (inflation, interest, and unemployment) are in the single digits, is nothing more than the redistribution of wealth. True stimulation can only come in the form of tax reductions for users of staples (i.e. fuel). A rebate check of $800 will buy a TV where the stimulus goes to the Korean economy, whereas a federal tax reduction on gas and diesel will create true stimulus by making all commodities more affordable as well as the ability to get to work cheaper. Though opponents will insist that a reduction in the fuel price will increase consumption, I believe that it is not our place to hold everybody's hand, but that individuals and families have to take advantage of the possible savings if they are truly in this dire need. Secondly, a tax rebate does not stimulate future planning and long-term thinking, but just patches previous problems. The subprime problem is one of the very few economic situations that was caused by opportunistic lenders. The traditional cure for high prices is high prices, and for low income is low income. Put the traditional forces to work and we will be well sooner than later.

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