This article is in response to a piece about how it looks like massive stimulus is finally upon us and the only question is how big it will be. It would be wise to remember this is all an experiment and could result in a false economy so rooted in unsustainable stimulus that it cannot survive yet alone flourish. A modern example of this is the implosion of the USSR in 1991. The impact of such a collapse is not limited to the economy but extends deep into the lives of a county's citizens.

When we look back over the wreckage brought upon certain sectors of our economy during the last year and the policies governments are now embracing we should feel a sense of dread and apprehension for the long-term health of our culture. Government overreach is in full swing and ripping away the strength and social power from all other institutions of social life. Not only are we seeing our civil liberties under attack, but the lock-downs have also been an economic disaster that has devastated most small and medium-sized businesses. 

The December job numbers show America lost 140,000 jobs last month. The big issue here is that as small businesses close their doors forever, many of these jobs won't be coming back. We need to couple this with the idea the minimum wage is likely to soon increase driving the forces of automation into overdrive which will further reduce job opportunities in the future. This translates into far higher government deficits going forward as many more Americans exit the workforce. It is difficult to argue that the government stepping into the role of our primary supporter does not reduce our incentive to work. This is especially true considering the level of support many Americans seek.

The fact is, neither monetary nor fiscal policy will effectively stimulate the economy. More important are the policies enacted by Washington so far we have witnessed nothing positive flowing from our nation's capital. Do not be surprised if we are about to slide into a multi-year economic downturn. An example of this is evident in the prediction that New York city's recovery could take two years longer than the rest of the country as the virus-induced downturn has severely damaged five key industries - restaurants, hotels, the arts, transportation, and building services - most of which heavily rely on travel and tourism.

The idea we are in a false economy while many Americans  remain out of work is underlined by an event that has gone largely unnoticed by many Americans. A colossal container-ship traffic jam has grown off the California coast. The pileup of container ships offshore in San Pedro Bay and the congestion onshore at the terminals have reached epic proportions and will most likely get even more maddening in the weeks ahead. It seems these ships are full of consumer goods from countries like China that benefited greatly as Americans used the COVID-19 money from our government intended for buying food and paying rent to instead purchase foreign-made goods. 

This dovetails with a previous article on this blog that pointed out that where and how people spend the money given to them by the American government matters and will continue to impact our economy. The port congestion due to the spike in import volumes is expected to last until February. Making matters worse at the terminals is they are operating with limited labor and split shifts due to COVID-19. The labor shortage is affecting turnaround time for truckers, inter-terminal transfers, and the number of daily appointments available for gate transactions. This is even causing containers to end up in the wrong terminal. Similar congestion is now being seen in Canada as well as in the Port of New York and New Jersey.

Turning back to the issue of hope and printing money, later in the day the surprisingly bad job numbers were released, Biden came out declaring his administration with its two newly elected Democrat Senators would hit the ground running.

“The price tag will be high,” Biden said of his planned package in Wilmington, Delaware before taking office on Jan. 20. He went on to say,“It will be in the trillions of dollars.”

When approaching the idea that a massive stimulus is finally upon us and the only question is how big it will be. The Biden team is considering up to $2 trillion in fiscal stimulus, well above earlier estimates of $750 billion. The problem we face is that while promising "stimulus on steroids" is about to be unleashed does not necessarily create a strong economy. More does not always translate into strength, it just means more.

Even to the many who see government spending on infrastructure as a job creator and a silver bullet for our ailing economy I would like to raise a word of caution, things are not that simple. What is clear is that when Washington begins to talk about infrastructure spending, hands go out across America as politicians and businesses  rush to endorse such programs, of course, the first words out of their mouths are "This should be administered on a local level so the money is not squandered by the inefficient minions of  Washington that don't understand the priorities we face."

This sets in play the feel-good issuance of what is herald as free money being gifted by those in charge. What is their not to like? When it comes to the virtues of infrastructure spending it may be time for a truth-off. The truth is more "bridges to nowhere" and wasted spending exists then the taxpayer could ever imagine. Often infrastructure spending falls short of creating real wealth for our country but merely feeds cronyism and ends up lining the pockets of those in power and their friends.

Economic strength and economic growth are two very different animals. You don't have to stimulate a strong economy. Poorly spending even trillions of dollars does not necessarily create a strong economy. We are embarking on an economic experiment and will result in a false economy so rooted in unsustainable stimulus that it cannot survive. False economies create bubbles and debt. Adding to this ugliness is the money being doled out, wasted, and squandered is borrowed from our children's future yet few people have the courage to say, stop this madness.