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March 23, 2009
How the new stimulus plan will work
Three contractors are bidding to fix a broken fence at the White House. One is from Chicago , another is from Tennessee , and the third is from Minnesota .
All three go with a White House official to examine the fence. The Minnesota contractor takes out a tape measure and does some measuring, then works some figures with a pencil. "Well," he says, "I figure the job will run about $900: $400 for materials, $400 for my crew and $100 profit for me."
The Tennessee contractor also does some measuring and figuring, then says, "I can do this job for $700: $300 for materials, $300 for my crew and $100 profit for me."
The Chicago contractor doesn't measure or figure, but leans over to the White House official and whispers, "$2,700."
The official, incredulous, says, "You didn't even measure like the other guys! How did you come up with such a high figure?"
The Chicago contractor whispers back, "$1000 for me, $1000 for you, and we hire the guy from Tennessee to fix the fence."
"Done!" replies the government official.
And that, my friends, is how the new stimulus plan will work.
Posted by Rob Kiser on March 23, 2009 at 4:30 PM
Comments
This should be ECON101 taught in elementary school.
Discussions when the FDIC was created:
Bank: Well, we have all this money in our bank just sitting there, why don't we lend it to people?
Govt: Because it's not our money. Someday, someone's going to want to take it back out.
Bank: By then more people will have put their money into our bank. We can use that.
Govt: Well, yeah, but then someday, THEY will want to take it out.
Bank: But then we'll have more money to pay for THAT! It's a no lose situation! What if you enforce that we need to keep, say, a dime for every dollar someone deposits. Would that make it okay?
Govt: I guess that should work. That way you'll always have SOMETHING on hand. But what about when the Baby Boomers retire? Won't there be a rush on the funds?
Bank: You know, and I know, that it's 40 yrs from now. Let the next government officials worry about that. Besides, you're the government. You can always print more money to cover this.
Govt: Sounds good! I wonder... if someone ever figures out how simple this plan is, they could make a killing on the stock market. But nobody's as under-handed as US! (Are they?)
Posted by: Tom on March 23, 2009 at 5:46 PM