What is Stimulative?

This morning, I was watching Fox and Friends to see what Donald Trump had to say. Included in the group on the couch was Geraldo Rivera. As they were picking apart the stimulus plan and discussing about the pork in the law, something really strange happened: I agreed with Geraldo.

This is pretty weird. It is right up there with seeing a goat flying outside the window of a 747. If you ever find yourself agreeing with Geraldo, then you might go a little dizzy as I did. Just sit down, collect yourself and try to regain your composure.

The Donald was saying that all this spending is going to destroy the economy. All we need is time and everything will be fine. Then Geraldo said it. Stimulus spending is any spending. He used the example of a grape juice museum (which is not in the plan). If the government builds the grape juice museum, while not necessarily what we need, it would still be stimulative. He is right!

Anytime the government borrows money and then spends it is in fact, stimulative in the present time or when it is spent. Yes, over the long haul that money needs to be paid back which will come from higher taxes or inflationary repayment (printing the money). But the immediate effect is stimulative.

So while we may not agree with all the things that are being bought, we should agree that any money that is spent and not immediately paid for with taxes is stimulative.