Food stamps as "stimulus"

The current regime gets more and more desperate. Now the head of Agriculture is saying that food stamps are about the most powerful kind of stimulus you can have.

Man, this guy, Vilsack or something like that, really has his head up his butt.

He says every time you spend $1.00 in a grocery store, you impact the whole supply chain, triggering production, delivery trucks, stock boys, cashiers, blah-blah-blah. So if you spend $1.00, you generate $1.82 in the economy.

This is old. It's known as "the multiplier effect." And if it's true at all, it's true for spending private dollars as well as government food stamps.

The main difference is -- and please pay attention, Vilsack, et. al. -- EVERY TIME YOU SPEND $1.00 IN FOOD STAMPS, OR IN ANY OTHER GOVERNMENT PROGRAM, YOU CREATE $1.00 (AT LEAST) IN GOVERNMENT DEBT.

And the "multiplier effect" of government debt is... taking money out of the hands of investors and entrepreneurs who spend it to underwrite the creation and growth of productive -- that is, profit-making -- ventures. This is how the private sector creates jobs. And in succcessful ventures, profits keep on creating more and more jobs.

And then, of course, consider another "multiplier effect." That is, just gettng food stamps into the hands of the public requires how much MORE government spending? Collecting taxes, IRS processing, establishing agencies and systems to distribute the food stamps, etc etc etc. So how much is Obamacare going to cost us -- above and beyond legitimate payments to doctors, hospitals, etc. The socialized medicine bill creates something like 165 new government agencies. All to deliver "free" health care. Yeah. Right. (See, the Good Fairy from the East comes by and replenishes the US Treasury from time to time.)

With all this in view, I think $1.00 in food stamps probably costs the US economy about $12.00. But I'm just guessing. It's probably a lot higher than that.

I've also heard it said -- and by otherwise intelligent and well educated people -- that government stimuulus and private spending have exactly the same impact.

No, no, no, no, no. You see, with government spending, especially with stuff like food stamps, you get this wide disbursal of funds across many, many people. You know, a dollar here, a dollar there. It tends to make "capital formation" which is what banks and rich people do, impossible. And you need capital formation, or large pools of capital, to fund productive ventures, launch businesses and so forth.

Even the government needs capital formation for big projects. 'Course, since all government money is appropriated from private citizens, ANY CAPITAL THE GOVERNMENT HAS REPRESENTS GOVERNMENT DEBT. Worth keeping that in mind.

Got it? Good. It's not hard to understand. Apparently only the blockheads in government and Paul Krugmann fail to see it.

Save the Republic.