A 1-In-100 Blogger: Proof Obama's Spending is Not Working

Friday, February 12, 2010

Proof Obama's Spending is Not Working

The proof was right in front of us the whole time. Obama's spending bills, his first Stimulus bill and now the Jobs bill, are not working. I blogged earlier about the M1 Multiplier and its effects on the the U.S. Dollar. To the best of my abilities, it was an in depth look at how the recent drop in the multiplier below 1.0 will impact the economy. As it turns out, CNBC's veteran trader and financial executive, Rick Santelli, had mentioned the M1 Money Multiplier during his famous Tea Party rant and outrage about the bailouts.

During Santelli's Tea Party declaration, he said this about the M1 Multiplier.

"...These guys are pretty straightforward and, my guess is, a pretty good statistical cross section of America, the silent majority. They're pretty much of the notion that you can't buy your way into prosperity, and if the multiplier that all of these Washington economists are selling us is over one, that we never have to worry about the economy again, the government should spend a trillion dollars an hour because we'll get $1.5 trillion back..."

So, at a time when, before Obama's first Stimulus bailout, the M1 Multiplier was above one. This was said to be the reason Washington was confident in Obama's "Stimulus" bill, because the multiplier was above one. The theory that the Obama administration used is that by printing more money and spending $1 Trillion will help because it will in turn create $1.5 Trillion in the economy.

The problem is that the stimulus bill and Obama's continuous printing of money has caused the M1 Multiplier to wildly tank fast, dropping below one! This means that for Obama's recent "Jobs bill," (aka. Stimulus 2.0) and the Federal Reserve printing more U.S. Dollars, from each $1 printed, only $0.81 cents is actually making it into the economy.

If Obama irresponsibly spends another $1 Trillion it's only going to create about $810B in the economy. That's a monumental loss of monetary value and a complete waste of taxpayer dollars. So there it is, the M1 Multiplier dropping below 1.0 is proof that all of Obama's increases in spending and printing more money is actually hurting the economy -- and it's certainly not helping it.

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