In almost simultaneous events
last week Congress attacked baseball players for taking
performance-enhancing drugs while at the same time
supporting artificial and temporary stimulus for the US
economy no matter what the long-term costs.
Many people don’t like professional baseball players
using steroids because they mask the underlying ability of
the player. They taint the results.
But so does artificial economic stimulus. Monetary
policy accommodation can help people feel wealthier for
awhile, but it cannot create wealth. Printing money does not
make anyone wealthier. If it did, then counterfeiting should
be made legal and everyone in the world would then be
wealthy. The same is true for tax rebates. If they really
could increase wealth, then why not make them much larger
and much more frequent?
In the end, trying to increase spending without
increasing the country’s productive capacity is a fool’s
errand. Boosting demand without boosting supply causes a
misallocation of resources. Like with steroids any boost is
temporary and risks longer-term economic problems.--Brian Wesbury