Someone explain how putting our country $800 billion in the hole will help us.

[40oz]

Ok, so I am a bit of an economic retard. I don't know much about the economy or finances or all that jazz. What I do know however, is that the value of our currency is directly related to the amount of currency in circulation.

I also know that the value of our currency is slipping.

From what I have heard, the purpose of Obama's stimulus package is to save the banks and thus the entire economy from collapsing. So now here is my question. Actually it is a series of questions.

Where the hell is this $800 billion coming from? Are we just gonna hit up the federal reserve bank to create that money and hand it out, or is it going to be coming from money already in circulation? If it is money already in circulation, then what the hell is the government doing sitting on $800 bil? We got problems that said money could have been fixing for years now. If the money needs to be created, won't that extra $800 billion in our currency system cause our dollar's value to plummet? What then? Our money will be worthless and our economic problems will be just beginning. The government can't just go around making new money to cover its financial problems whenever they arise, thats just not how it works.

So please, if there is someone who understands all this stuff better than me, can you please explain how this $800 billion stimulus package is supposed to help our country? thanks

40oz Reviewed by 40oz on 02-18-2009. Someone explain how putting our country $800 billion in the hole will help us. Ok, so I am a bit of an economic retard. I don't know much about the economy or finances or all that jazz. What I do know however, is that the value of our currency is directly related to the amount of currency in circulation. I also know that the value of our currency is slipping. From what I have heard, the purpose of Obama's stimulus package is to save the banks and thus the entire economy from collapsing. So now here is my question. Actually it is a series of questions. Where the Rating: 5

[cannakeeper]

The ones that are retarded is the Govt, that being said, pick what you think is the most retarded answer that makes no sense what so ever and that is likely to be the answer.

[killerweed420]

It will end up a combination of the 2. We'll be borrowing billions from China and plus the federal reserve will be printing more worthless paper. And then the fun starts. After they print more worthless paper thats when inflation starts kicking in along with the devalued dollar. Nobody's bothering to talk about that because its a year or so down the road.

[Markass]

It will end up a combination of the 2. We'll be borrowing billions from China and plus the federal reserve will be printing more worthless paper. And then the fun starts. After they print more worthless paper thats when inflation starts kicking in along with the devalued dollar. Nobody's bothering to talk about that because its a year or so down the road.

and they rely on American's not thinking about that aspect...intelligent people, however, do think about that, which is why it doesn't make sense to any logical thinking person..the people we borrow money from already know they're not going to ever see it again..which is why I'll bet most of it comes right out of thin air...

If the federal reserve counterfits it's okay, but if we were to do it ourselves we'd go to prison for it..

[luciddreamer]

The government can't just go around making new money to cover its financial problems whenever they arise, thats just not how it works.

I'm sorry, they can and it is.

Cannakeeper - That was f'ing hilarious LMAO

[40oz]

I'm sorry, they can and it is.

Well sure, they can print the money, but that's not how the system works. Printing more money won't solve our financial problems, it will just create new, most likley more devastating ones. What do we do when it costs us $100 US to buy a roll of toilet paper in mexico?

[McDanger]

It will end up a combination of the 2. We'll be borrowing billions from China and plus the federal reserve will be printing more worthless paper. And then the fun starts. After they print more worthless paper thats when inflation starts kicking in along with the devalued dollar. Nobody's bothering to talk about that because its a year or so down the road.

Just today it was announced by the labor dept. an increase of .8% for January when it was predicted to be .2%. Hope and Change

[Dream of the iris]

Not necessarily trying to defend the 800 Billion stimulus package, but you do realize the government understands the the problem with creating money. Then why are they doing this? The purpose of the 800 billion stimulus package isn't to just fix the economy and go on with our lives. It's more of an ad hoc to the problem and they know this which is exactly why they did this. The stimulus package is meant to buy more time for them so that they can come up with a more effective plan for the long term. Creating money does in fact de-value the dollar but this stimulus package is literally just a dent in regards to inflation. I don't expect future stimulus packages. Maybe one more but other than that I expect them to find results with the time that they just bought themselves.

You see, if we didn't "kick start" the economy then it would all come crumbling down very fast and very hard. The stimulus package is artificially propping up the industries which of course everyone knows isn't good as a long term solution but it does allow the crash to be significantly more pleasant than simply letting it all fall down. Even though we are de-valuing the dollar the de-value isn't as significant of a change as it would be if the economy just completely collapsed. Now even with the stimulus package we're going to crash but it will be much more pleasant.

What Obama is talking about now is increasing the taxes and looking at the budget to see what cut backs need to be made. Right now he's considering international cut backs which is a great idea but he's also looking into the national system and finding out where the most money is being wasted. Increasing taxes while making cut backs that is the least damaging to citizens is the best way to come crashing. So as absurd as a stimulus package may seem its much better than the alternative of letting everything crash while trying to manage raising taxes and decreasing spending. The government is establishing breathing room for themselves.

Kind of sucks being in charge sometimes....

[40oz]

thank you iris, thats what i wanted to hear.

however, i still don't see how that can help us much, but i guess obama's plan is better than mine. which is nothing.

[GoldenBoy812]

Ok, so I am a bit of an economic retard. I don't know much about the economy or finances or all that jazz. What I do know however, is that the value of our currency is directly related to the amount of currency in circulation.

I also know that the value of our currency is slipping.

From what I have heard, the purpose of Obama's stimulus package is to save the banks and thus the entire economy from collapsing. So now here is my question. Actually it is a series of questions.

Where the hell is this $800 billion coming from? Are we just gonna hit up the federal reserve bank to create that money and hand it out, or is it going to be coming from money already in circulation? If it is money already in circulation, then what the hell is the government doing sitting on $800 bil? We got problems that said money could have been fixing for years now. If the money needs to be created, won't that extra $800 billion in our currency system cause our dollar's value to plummet? What then? Our money will be worthless and our economic problems will be just beginning. The government can't just go around making new money to cover its financial problems whenever they arise, thats just not how it works.

So please, if there is someone who understands all this stuff better than me, can you please explain how this $800 billion stimulus package is supposed to help our country? thanks

Here is the deal. The value of all assets (their prices) have been falling since the end of August, signaling a massive decline in overall wealth. Such assets can include real estate, equities (stocks and options), securities (various loans), and commodities (until gold recently). As the prices of everything begin to fall, the next big leap down will be wages. Since the majority of purchases are sticky because hey require finance to pay for them (property/autos), a fall in wages translates to a decrease in disposable income (income left after paying bills/necessities). This is a recipe for disaster, because prices in goods will rise much faster than wages will, which will cause even more pain to the consumer.

The problem is, a stimulus package as poorly put together as the one enacted by Obama is not really what it seems. Yes it is a big number, but only something like $130 billion will be released into the economy by this year. The majority of the money is expected to be released by 2012, which IMHO is far too late. On top of the time laggard, the majority of this bill is in the form of tax cuts. I believe they should have been building new science facilities, labs, transportation, nuclear power plants, etc.... By doing this, they would be creating new jobs, and with it a new cycle of spending by the workers who earn a paycheck. After the infrastructure is finished, businesses and individuals will benefit by the efficiency offered by such an investment.

Instead, they decided to give tax money back to promote consumption. Yes there is some stimulus for education included, but i expected much much more, and zero to little tax incentives.

The money comes from those who purchase treasury securities. Don't get confused by the fear mongers, China will not finance our entire stimulus. They lack the liquidity to pay for both our stimulus, and the one they enacted last November which rivals ours in quantity and quality.