Jarhead
Gold Member
- Jan 11, 2010
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of course it helped the manufacturers of heavy equipment! Heavy equipment doesn't last forever. Parts need to be maintained and replaced. Whole units need to be exchanged sooner....you are forgetting something...the most important factor involved in the application of a stimulus...
We were in a recession.
There was a generous surplus of non perishable proiducts available. There was no need to build new equipment..there was already a surplus.....so for the shovel ready jobs, it did wonders for the distributers of tar, but did not help the manufacturers of tar. It was great for the sellers of heavy equipment but did not help the manufacuters of heavuy equipment.As for money still in the economy...yes, of course it is...but it is not beiung spent as business owners are aware that the increase in demand was stimulus prompted and will likely dissipate...so to spend the money to increase production of goods that will likely be shelved again is not a smart business move.
Yes, it's still in the economy. OK, we agree on that. It didn't disappear. It's circulating in the economy, correct? Business owners have more access to capital. Individuals have more access to consumption and investment income. Capital projects have more access to money.
Remind me again how the enlarged size of the pie doesn't benefit the people inside the pie, which is really basic economics.
you are a smart guy...
A back hoe can sit for 3 years and not depreciate in value. They start the engine once every two weeks and all is good.
Tar does not depreciate at all.
Concrete does not depreciate when it is in the sand phase.
Nor does wood in a lumber yeard.
Brass? Thousands of years half life.
And I can go on.
And no...it is not circulating. That is the problem.
Here is the scnario...
Joe bought a back hoe from Jim 2 years ago.
Joe could not sell it retail becuase no one was digging due to the recession.
Stimulus has a new project slated in Joe's neighborhood.
He sells that backhoe to Frank who won the contract....Frank bought it with stimulus money.
Joe did not make money....he simply offset his losses of the last 2 years for not being able to sell it for the last two years.
Jim, on the otherhand made nothing on the project as he sold that back hoe 2 years earlier to Jim.
So Jim does not hire or make any money, Joe does not hire or make any money, Frnak hires a temproary employee and spends money he got from the government.
The project ends and Frank is back to where he was and he lays off the employee.
In the meantime, Jim sees nothing on the horizon so he still is not making new back hoes...Joe sees the same so he is not buying any back hoes...and Frank sees nothing on the horizon so he is saving the little money he made as he fears no business for a while.
Oh yeah...and the employee Frank hired? He is back on unemployment, so the little money he made is in his bank account.
No money is circulating.