Thursday, March 13, 2014

Why State and Federal Stimulus Packages Seldom Work

It was a slow day in a small town located down state; the streets were deserted. Times have been tough the past year and everybody, especially the business owners, were all in debt. Just about every resident has been living on credit. 

Just then a staffer from the Governor's office in the state capital drove into town. He stopped in front of the local motel and looked around Main Street. 

Eventually he walked into the motel and laid a $100 bill on the front desk. He explained to the owner that he wanted to inspect every room in the motel to see if they were suitable for an Economic Summit the Governor was considering having in this small hamlet. The Governor wants to invite nonpartisan business and political leaders to gather together so they can shed light on the state’s economy and come up with a list of ideas he can consider to improve the state’s troubled economy.  

Since all the rooms were empty, the owner gladly handed the state official his master key. As soon as the state representative walked upstairs, the motel owner grabbed the hundred dollar bill on the counter and ran next door to pay down his debt with the butcher. The butcher thanked him and then took the hundred dollar bill down the street to retire his debt with the pig farmer. The pig farmer picked up the money and headed straight over to the co-op to pay off his debt with his feed supplier.

The feed supplier at the co-op, who happens to be single, grabbed the $100 and ran around the corner to pay off some of his debt with the local “lady of the night” who he had been spending considerable time with the past year.

Since times we hard for her as well the past twelve month had outstanding credit she had to pay off as well.  So took the money and rushed over to the motel and handed the $100 bill to the motel owner to pay down part of her motel room bills for all the rooms she has used over the past few months but wasn’t able to pay for.  

The motel proprietor takes the money from her and places it back on the center of the counter exactly where it was when the state official laid it down. 

Soon the governor’s staff employee returns from his room inspections and sadly announces the rooms would not be satisfactory for the planned summit the Governor wants to have.  He he will continue to look at other small rural towns. 

He hands the master key back to the motel owner, says thanks then picks up his $100 bill and leaves the motel, gets in his car and drives away.

Now it is important for everyone to note that nowhere in this example did individual produce anything or earn anything new; however at this very point in time, many small business owners in this small town have paid down their debt and are extremely grateful the state intervened. 

With the debt burden decreased there is now a genuine atmosphere of optimism throughout this town that things will soon be getting better. 

This my friends, is a prime example of how most "State and Federal Government Stimulus Packages" actually work!

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