Quote Originally Posted by 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
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.