Embalmer's US stimulus

[PM-Junkie]

What do people reckon....will it do any good? Will it have any impact on those of us who run businesses in the UK?

My thoughts:

1. The dollar. Increasing borrowing by $790 billion is a huge inflationary thump, and that negatively impacts the inherent value of the dollar. Couple that with doubts over whether the stimulus will have the desired effect increases the downward pressure. Does that weaken the dollar more than the Euro and the pound? - only time will tell. My suspicion is yes it does.
   
2. It was touted as being a package to create up to 4 million jobs. After the republicans threw their toys out of the pram, and the democrats used it to further their agenda (not all of the "stimulus package" is actually a stimulus), I can't see it creating more than about 2 million jobs...which means they'll need another stimulus in a couple of years.
   
3. A hefty chunk of the stimulus takes the form of an unfunded handout in the form of rebates. It is assumed that this will stimulate spending and kick the economy into life. I'm not convinced.
   
4. When will this begin to have an effect? Opinion ranges between the end of Q2 and the end of Q4. The longer it goes on, the more nervous people will get, and that will have a knock-on effect on the world economy...and us.
   
5. The spending is controlled by the CBO (congressional budget office), who are notoriously slow. Big danger that the money won't get out there as quickly as the number crunchers have calculated...which is why I don't think it will have any real impact until near the end of this year, if at all.

Clearly the sooner the US economy springs back to life, the better it will be for us. Will this package have a dramatic effect? - I don't think so. Will it weaken the dollar against the pound? - I suspect yes. Particularly as market sentiment as to the competence of the UK government appears to have already been built in...witness the negligible effect on the value of sterling of the most recent monetary and fiscal stimulus efforts in the UK.

If both those suspicions prove right, this package will actually have a negative effect on us.

I'm probably wrong though...

[Doggy Styles]

Nobody has told me how these debts will eventually be paid off.

I don't know about the US, but proper wealth creators in the UK are a bit thin on the ground.

[PM-Junkie]

Nobody has told me how these debts will eventually be paid off.

I don't know about the US, but proper wealth creators in the UK are a bit thin on the ground.

As inflation increases the value of a debt decreases. Maybe that's the plan?