Isn't it amazing how this country can take an individual with limited credentials that only include being 35 years of age and a natural born citizen, place that individual in the White House and immediately the country listens to this person as though he is an expert on the economy, military strategy, immigration and an untold number of additional topics?   President Obama just attended the G20 Summit in Toronto, Canada.   This was no Milton Friedman on the dais.  It was a youngster by comparison, educated in the social sciences and a man who prior to entering politics spent his career teaching law and working as a community organizer.   Not too surprisingly, the President found himself alone at that meeting as he promoted his belief that countries can continue to borrow and spend their way to prosperity.   Even Angela Merkel of Germany and Stephen Harper of Canada had to be perplexed to see the leader of the strongest economic power in the world advocating sheer lunacy in their midst in such a professorial manner.  Sadly, this is all Obama knows.  He knows nothing of the real world yet we have asked him to lead that real world as our president.  What were we thinking of?

Obama is lost in Keynesian Economic theory because he believes Keynes supports what he wants to do.  However, I imagine that Keynes himself would roll over in his grave at the current application of his theories.  Conservatives because of the demonstrated success of Supply Side Economics berate Keynes based upon an interpretation that I believe is only partly correct.   I won't defend Keynesian Economics because I am a Supply-Sider myself, but I will defend Keynes at least to this extent.   I believe that when Keynes theorized that government should pump money into an economy during recessionary periods he wasn't speaking of welfare payments or direct stipends to millions of citizens.  He wasn't advocating that money be placed directly in the hands of the consumer.   He was speaking of the government becoming the consumer.  

When the government invests billions of dollars for the construction of a number of new sophisticated aircraft, an aircraft manufacturer will begin to hire.   The manufacturer will draw people to a community for new jobs.  The new employees will generate a demand in that community for housing, food and services.   New grocery stores, theaters, dry cleaners, construction companies, schools, etc. will spring up to meet this demand and they in turn will generate an increase in the demand for housing, food, construction and services for themselves.   The geographic region where these planes will be built will be stimulated.   The communities from where the aircraft manufacturer obtains its parts and other raw materials will also be stimulated because each upstream manufacturer or raw material supplier will have a material change in the demand for their product that will cause them to hire.  

Contrast this to a $650 check to every American.   The benefits from that payment will be scattered across the country and will be used in a multitude of different ways.   Some people will pay off debt.  This is good but it doesn't stimulate.    Some will use it as a down payment on a new car or some other durable.  This is also good but it isn't concentrated in a single area and as such the businesses where this money will be spent will barely see an impact on their overall demand and they certainly won't be induced as a result of the one-time expenditures to hire new employees or increase their inventory.   The auto dealership will absorb the purchases in their business, the appliance store may see a small increase in the sale of refrigerators, the television store may sell a couple of extra HD televisions, etc.  There will be no stimulation. 

Wise up Mr. President.