E Stimulus Doesn't Always Stimulate - Pushing On A String

The word stimulus has become an oft-repeated term, sometimes overused. We are referring to the non-biological meaning below.

According to the dictionary,  stimulus is "a thing that rouses activity or energy in someone or something; a spur or incentive".

Besides spur and incentive, other synonyms for stimulus are boost, impetus, prompt, provoke, etc.

Much discussion recently has centered on 'stimulus' checks to individual citizens and taxpayers. Within a nine-month period, two specific rounds of stimulus checks were issued.

The legislation that authorized the issuance of stimulus checks to individuals also included liberal increases in unemployment benefits and financial aid for small businesses.

The checks, increased unemployment benefits, and aid for small businesses are forms of financial stimulus; but, the legislation is referred to as an "economic stimulus package".

The distinction between the terms financial and economic should not be overlooked.

The purpose of the financial incentives included in the legislation is to promote economic activity. It was a response to the horrendous decline in economic activity that was precipitated by response to the Covid-19 pandemic.

Very literally, though, the financial incentives were an attempt to stave off economic collapse; or at least buy some time. This is true notwithstanding attempts by politicians of all stripes to justify the measures in more humane terms.

21st CENTURY - SLOW GROWTH, NO GROWTH

The first fifteen years of this century were spent in reverse and recovery modes. The trillions of dollars that have been created and spent were reactions to financial and economic catastrophe, which continue to increase in volatility.

This brings us back to the title of this article. With artificial stimulants, such as certain drugs, there is an expectation of desirable positive effects from its use.

Remember how long it took to bring the economy back to a level reasonably commensurate with its activity prior the credit collapse in 2007-08?

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Kelsey Williams is the author of two books: Inflation, What it is, What It Isn't, And Who's Responsible For It and  more

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