We, Americans, have been clobbered over the head with the term over the last few years. It's Obama's big plan...our supposed LBH (Last Best Hope)...the thing we're told to cling to.
Given the popularity of the term, how have stimulus packages fared thoughout history (that might have been a good question to ask before Washington spent all that money)?
There is a recent example of stimulus spending. Japan. From the 1990s to today.
In 1990, Japan's stock market, the NIKKEI, was at 40.000. Today, it's hovering around 9.000, That's a loss of 77.5% and certainly not how you go about making money.
Over that time, Japan's government stimulated and stimulated until it was in debt equal to 250% of GDP. Not only that but the government influenced central bank's to lower their interest rates to zero. Yup, zero.
Well, with zero interest rates, things should have gotten better in a huge hurry, right? Wrong. Again, the NIKKEI has fallen 77.5% over those same zero interest rate years.
There's one thing Japan's zero rates (technically, they're at .01% today) and our own low rates will conclusively demonstrate: As soon as they begin to rise in both nations, as they inevitably must, the party (such as it is) is over. The markets will look at it as yet another extremely negative recessionary development.
All except gold. Contrary to public opinion, gold coins have risen along with interest rates (see Kevin DeMeritt's 2007 aricle, Rising Interest Rates and Gold). Not only that, but gold coins, as their record clearly shows, are refusing to participate in the recession. And why should they? Gold coins have nothing in common with the culprits who got us into this mess -- namely inflated dollars, real estate and politicians.
Do yourself a favor and don't hang your hopes on any of these poorly conceived stimulus packages. They just don't work. Instead, take a good long look at what has worked: beautiful, rare, gleaming, glowing gold coins.•