For many companies, the anticipation of the stimulus is like waiting for a stretch of rainy days to end, excited for the sunny days that the meteorologist promised. And just as the sunniest days cast the deepest shadows, so too will the glory days of stimulus spending be balanced with the bold consequences of debt.
My intent is not to sound an alarm of gloom and doom–others have long since done that. My intent is just the opposite–the more we truly understand and appreciate the carry-over effects of this stimulus spending, the better off we may be in helping to alleviate the immense burden we will be placing on the generations that follow. Simply put, it’s a one-year stimulus that will likely cast a seven-year shadow.
Recognize the Shadow, But Don’t Fear It
What effects could we expect to see? Bilions of dollars of debt, greater than any level of debt our country has ever seen. Foreign entities are investing in the U.S., and thankfully they are. But with the debt rising at an exhoritant rate, we risk deflating foreign confidence in continuing to invest in our country on the scale that we need.
So what then? We print more money. The value of the dollar drops and drops. Other foreign investments become more attractive. The investors we count on to continue pooling money into our country and economy withdraw. And this could occur after a notable percentage of our country’s infrastructure is owned by foreign investors.
If You See a Shadow, There Must Be Light
Is there a better solution? That depends on your school of thought, your priorities, and your understandng of the multiplier. With any proposed solution that promises a sunny day, there will always be shadows. That’s unavoidable. But as long as we see the sunrise the next day, it’s as good a day as any other.