Is This Government Rebate a Good Idea?

Congress has voted to add $168 billion to the deficit over the next two years. It’s for an economic aid plan because of a perceived recession. I know, there is an election coming in November. Neither political party wants to be accused of not caring about the citizens. The problem is that the Federal government has no excess money. The national debt now exceeds $9 trillion. In 2000 that number was $5.6 trillion. My source is the Office of the President http://www.gpoaccess.gov/usbudget/fy01/guide04.html.

We will have to borrow the $168 billion dollars that will be given to the citizens. It’s not all rebates because the final plan will give money to retired people on social security and disabled veterans. We have not paid for the Iraq War or the various earmark spending projects passed by Congress and signed into law. John McCain avoided voting for or against this give away by not returning to Washington, D.C. He was correct in not voting for tax reductions that lacked compensating reductions in spending.

The real sorry part of this story is that many people will not be spending that money on anything new. Most of us will be receiving only $600 or $1,200. Many people, like me, will be using the money to pay prior existing bills.

Furthermore, inflation is a real. I believe it is much worse than the reported CPI inflation index. The most flagrant proof is the cost of a Thanksgiving dinner for ten people that rose by 11% between 2006 and 2007.

As the government floods the nation with more cash, the Federal Reserve is now starting to say inflation may be the next big issue. That translates to no more interest rate cuts and perhaps an interest increase. Yikes, they just lowered the interest rate. Does anyone know what they are doing?