Fooling the Future

Government Planner:  Our next stimulus plan is really, really targeted at creating jobs and prosperity.
Mike:  What about the last stimulus plan?

Planner:  That was only sort of, kind of targeted at creating jobs and prosperity. We were distracted.
Mike:  How long will this new stimulus work?

Planner:  For about a year, probably past the next election.
Mike:  Then what?

Planner:  We'll have another stimulus plan ready, to continue the good works of the last two.

Future Economic News:

Federal Reserve Chairman Ben Bernanke has announced that Quantitative Easing Eight combined with Stimulus Six has not achieved the results that "were expected by now-fired Fed analysts". This is despite recent reports of an IRS program to increase tax audits unless "businessmen borrow money and invest in job-creating expansion, like it or not".

Quantitative Easing plus Stimulus is the following strategy:

(1) Increased government purchases and salaries cause increased demand for filing cabinets and restaurant meals. This starts a virtuous cascade of money throughout the society, leading to an explosion of wealth and prosperity.

(2) Small businessmen with "more luck than brains" are fooled into investment and expansion by a six-month, 5% increase in business. They will naturally hire more workers, at least until the six-month government buying spree ends.

"It is mystifying that this plan has yet again failed" said Bernanke. "We have run out of traditional economic levers to pull. Very few businessmen have a degree from Harvard. Yet, manipulating money and credit is failing to fool businessmen in any significant way."

"We are now forced to use non-traditional methods. We are making huge ad buys in major markets. Our message is that it is patriotic to lose money, if necessary, by expanding business and hiring workers in the current environment of regulation, taxes, and medical mandates. That is the carrot."

"We accept that business owners are unhappy. We will make it clear just how much more unhappy business owners will be if they don't do what we say. We are fundamentally pro-business. We want businesses to prosper by doing exactly what we tell them to do. One for all and all for one. That is the stick."

Wags have unfairly and mindlessly compared government policy to the South Park cartoon  Underpants Gnomes:
(1) Collect underpants.  (2) ???  (3) Produce huge profits.

(See the video starting from 17:40. Sorry for the 30 second commercial.)

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Cause and Effect
EO -> 10/11/11 - Knowledge Problem by Michael Giberson
( Click the link above, then see the further link at the upper right. )

The oil price increases of the 1970s prompted politicians to raise interest rates in an attempt to control inflation. The economy slowed. Was this because of the oil price increase, or the result of the higher interest rate?

This seemingly simple economic question is actually hard, with uncertain answers, like most questions about the economy.

Motto: We don't really know, but we are willing to guess.

Martian Gold

Fred:  Gold! The Martians are paying about one ounce per day to work for them.
Mike:  I'm in. That's over $1,000 per day.
Fred:  Last week. Gold is $100 per ounce this week.
Mike:  That's OK. What will gold be worth next week?
Fred:  Who knows? But it's gold; how could we lose?

Future News:

It has been three years since the Martians arrived, smiling and giving gold coins to whoever would help them establish their "humanitarian aid colonies" around the world.

Government economists applauded, predicting that this injection of gold into the economy would make everyone rich and end the recession. Certainly gold is better than cash. Multitudes around the world are fully employed building the Martian colonies, raising the special foods that Martians love, and providing the Martian creatures with sighteseeing tours of the Earth.

Everyone has seen these coins in circulation. Government economists said that this was proof of the multiplier effect, as the coins are passed around, stimulating production in each passing.

Puzzling Effects

Some irritating private economists have noted puzzling effects. The value of gold is falling fast as more shows up in trade. The Martians respond by manufacturing even more of it with their secret process, handing out as much as needed to keep resources flowing to their projects.

The price of human goods is rising, in dollars and gold, as people realize that more of world agricultural and manufacturing capacity is going toward Martian needs. Some clearly confused people are complaining that "Everyone is working for the Martians" and "We can't eat gold, so what good is it?". Government and Martian economists have responded that economics is complicated, they are trained to think about these things, and that this should be left to the experts, not to the "peasants".

New Legislation

Pending legislation would direct the US  Treasury to print up as much money as needed to buy the Martian gold.

A Treasury offical:  The public would be more comfortable with dollars. We will buy the Martian gold, providing them with dollars. Then they can spend the dollars in the usual way. This is quite similar to stimulus spending on new projects.

The media have not noticed the comments of some fringe economists.

The flood of both gold and dollars is directing resources toward Martian needs. Humans hold vast quantities of dollars and Martian coins. These people want real things in the future. Why will people work in the future to deliver human goods to these people, in exchange only for those coins and dollars?

Coins or dollars, what is the difference now? They are both worthless in themselves. They are only IOU's.

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What happens when Martians or our government manufacture money? They receive real resources. The citizen or peasant gets an IOU.

A large part of the populace works for the government or on government supported projects, for money that has been borrowed or newly printed. The government is not building much of value to the public. So, what will those dollars and debts be worth in the future, when there is little of value to humans to exchange back for the dollars?

Obama Explains Millionaire Grants (smile)

Future News:

It is just weeks after Barack Obama won the 2012 election to his second term as President. White House Press Secretary Robert Gibbs provided some details today about President Obama's campaign promise to "make 95% of all citizens a millionaire".

Participants must earn less than $50,000, with a net worth less than $50,000. They must be a legal resident for 3 years at the time of the grant. Illegal status will incur a $10,000 penalty in exchange for immediate citizenship. Gibbs said: "It just seems fair not to spoil such a happy event because of a technicality".

The White House will establish the Department of Citizen Grants to administer the program. Applicants can sign up at WhiteHouse.gov or write to an address to be announced. DCG will be fully established "by next year, or a bit later". Until then, one grant per month will be "completed by hand". Grant ceremonies may be televised.

The DCG will issue at least 1,000 grants each month, "or even more" when fully operational.

Gibbs deflected criticism that this plan was too expensive and was proposed merely to buy votes. "We are all tired of hearing 'NO' from Republicans. They should propose their own plan if they object to ours."

Republicans complain that this program will cost at least $12 billion per year and will take approximately 11,000 years to award grants to just the 130 million people who are taxpayers.

Gibbs: "We disagree with our opponent's figures. Our economic advisors fully approve of this plan. These negative projections do not take into account future advances in money creation and grant making, which will result in net savings to the government overall and a revenue neutral program. The economy will receive $18 billion per year from this money injection, a 1.5 multiplier. The 60% tax on incomes over $100,000 will raise more than $6.5 billion per year for government programs to help the poor."

A reporter from Fox News asked Gibbs to "just look at the numbers". Gibbs: "I am not an economist, and I am not authorized to scribble things on a blackboard, even if we had a blackboard. We live in the richest country in the world, and $12 billion per year is quite affordable within the $20 trillion 2013 federal budget."

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Let's Counterfeit Our Way to Wealth
When an idea leads directly to a crazy result, what should we think about that idea? Maybe laugh at it until Obama explains in detail how it works.

If you believe Obama, Keynes, and their proclaimed wealth multiplier of 1.5 on government spending, then it would be valuable to counterfeit as much money as possible, of course under government regulation. You don't have to borrow counterfeit money, or pay it back. It is ideal for Keynesian government projects.

"Do The Right Thing" Bill

Future News

An ashamed Congress has debated the "Do The Right Thing" bill for a week, and it is expected to pass today. Senate approval should follow in short order.

A leading Congressman spoke anonymously to avoid "electoral difficulties":

None of us has read any of the bills this year before voting for them. Or, for that matter, after voting for them. Even the sponsors don't know the contents; this is left to the staff and lobbyists.

We certainly are ashamed. It is clear to all of us that we cannot go on this way. The average bill is now 1,500 pages, and the details of government have gotten out of hand.

'Do The Right Thing' will give us open, consistent, dynamic government. It grants President Michele Obama (now in her 3rd successful term in office) all principles and powers to consider all matters and then "Do the right thing". The Congress retains the important function of advising on the President's actions should she desire this.

The Congress is now free to do what it does best, arrange for hospital admissions, allocate liquor licenses, and grant carbohydrate waivers to restaurants.

A congressional colleague added:

We are being unfairly blamed for our YES votes. The opposition is just as bad for not reading or understanding the bill before voting NO. They are monuments to an ignorant opposition to anything new that they don't understand.

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Inspired by Not Reading Is Fundamental, 06/27/09 by Ed Driscol

The Political Manual
The "Bible of Politics" has come to light. (smile)