What are the economic implications of the stimulus plan?

Short answer: nobody freaking knows

When writing this post I'm not looking for anything political, but I would like to become more informed on the economic implications/repercussions of the current stimulus that is going to be passed...

Is it things like inflation due to all the money being printed?
What about arguments that it will only a temporary solution?

I'm pretty un-educated when it comes to strictly economic situations that may arise with the stimulus. But I've found some interesting things....

First off, the general consensus is that.... there is no consensus...

With that being said, Economics Phds are not afraid to give their input to the repercussions.


There is no consensus about the impact of the STIMULUS PACKAGE.
While most people agree that the government "should do
something", they disagree over how the package will affect the
economy.

The effects of taxes on the economy is still largely unresolved
question. Economists even disagree about what are the appropriate
tools and methodologies to study the effects of fiscal policies on the
economy.

Economists disagree on the HOW the stimulus package will affect the
economy. Some think that the only effect
is on the confidence. According to these people, Obama projects
confidence, and no matter what the details of the package are, as long
as he looks confident on TV, it will work. Others, using certain
sophisticated models, show that the effects of the stimulus package
will be negative (we transfer funds from the private sector to the
public, which is wasteful). Yet another group of economists, who also
use sophisticated models, find that the package will work. Economists
don't even agree on what it means for the stimulus package to "work"
(what would be considered a success?).

What is the bottom line? The consensus is that there is no consensus
about the current economic crisis. Years after this is over, and
economists will have analyzed the data from before, during and after
the crisis, perhaps we will have better answers to these fundamental
questions (how government policies affect the economy).

Look for my next post on my digestion of all the news that happened today throughout the WSJ/Bloomberg/NYtimes/Marketwatch etc.

Dan


PS
I'm working on a list of future posts (so I don't forget hehe) so I'm going to list them here
1) Why you should invest in platinum (now or soon)
2) Is now the worst time to find a job?
3) Investment Banking Interview thoughts/feelings (I have an interview on Friday)