Fiscal Stimulus Plan: Waste of Debt Financed Federal Spending

John Meynard Keynes is rolling over in his grave. While we’re no fan of Keynesian policies, the raw economics are valid. That being said, the latest plan by the US government to pump $146B into the pockets of American consumers is the bluntest type of instrument that a Keynesian can employ. It is a prostitution of Keynes’s intent.

Let’s put this largess into a perspective that readers will understand. $150B would allow every household in the US to be wired with municipal Fiber to the Home [FTTH]. Figure 100m American households at an average cost of $1500 (Verizon (VZ) is doing it for about this number, and that includes equipment) and you hit the $150B number right on the nose.

While this endeavor is not something we would advocate, it illustrates the magnitude of the utter waste of this debt financed federal spending.

If our government must engage in debt financed spending, it is best allocated into long term productive assets. Even Keynes was clear on this manner. FTTH fits this description, while dropping $800 laser-guided checks into consumer pockets does not.