As Bernanke gets ready for another round of “stimulus” in a vain attempt to push recovery in the U.S. it is worth recalling these absolute basics:
- Stimulus plans must be financed.
- If the financing takes the form of additional government debt, the added debt displaces other uses of the funds.
- Thus, stimulus plans only enhance incomes when they move resources from less productive to more productive uses.
Nowhere that I am aware has he identified what the current “unproductive uses” are let alone the “more productive” uses.