Tuesday, August 04, 2009

Cash For Clunkers Economics

The money Congress gives for clunkers is two billion worth of demands for wealth - not newly created wealth in and of itself. Therefore, every working man will lose about fifty bucks in diminished buying power to fund this inflation. By adding 2 billion of these inflated dollars into the marketplace it costs every man, women and child about twelve bucks so that people who have fuel inefficient cars can get $4500 for them if they buy a new car. This program is good for this small minority of lucky Americans and the car companies that are so mismanaged that they need these counterfeit injections of fiat currency just to stay afloat for another year or two.

But what about all the things that working Americans would have bought with their fifty bucks if not for being forced by the Treasury and the Federal Reserve and the Congress to pay for some stranger's new car? They and the commercial enterprises not patronized by these fifty dollar losers don't get counted in the Obama stats but they lose just the same. But it's only fifty bucks right? Well fifty buck here and fifty bucks there of shrinking purchasing power of the dollar and before long we're carrying a couple shopping bags full of money just to buy a loaf of bread...

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