Policymakers who are banking on stimulus programs are thinking in terms of an economy that no longer exists.... The U.S. labor force is being separated from the incomes associated with the goods and services that it consumes. With the rise of offshoring, layoffs are not only due to restrictive monetary policy
and inventory buildup. They are also the result of the substitution of cheaper
foreign labor for U.S. labor by American corporations. Americans cannot be
called back to work to jobs that have been moved abroad. In the New Economy,
layoffs can continue despite low interest rates and government stimulus
To the extent that monetary and fiscal policy can stimulate U.S.
consumer demand, much of the demand flows to the goods and services that are
produced offshore for U.S. markets. China, for example, benefits from the
stimulation of U.S. consumer demand. The rise in China’s GDP is financed by a
rise in the U.S. public debt burden.
Another barrier to the success of stimulus programs is the high debt
levels of Americans. The banks are being criticized for a failure to lend, but
much of the problem is that there are no consumers to whom to lend. Most
Americans already have more debt than they can handle.
In short, the stimulus programs are a complete crock. Now where did I stash my whiskey bottle?