It looks like Obama is going to announce his plan for more “stimulus” spending.  The plan is to spend another 50 billion dollars on roads, railways, and runways.

There are a lot of people on the right who think that Obama is a communist and/or socialist.  This may or may not be true, but the bottom line is that Obama has surrounded himself with Keynesians.  Obama and his advisors believe that the key to economic growth is spending and in particular, government spending.

While this kind of spending may not be as wasteful as other spending, it will not help the economy.  It is more government spending which misallocates resources.  It may stimulate the economy in the short-term in the sense that it will appear that the economy is better than it is, but in the long-term, it is more malinvestment that will have to be shaken out of the system.

The government keeps making things worse, just as it did during the Great Depression and New Deal.  50 billion dollars is not huge in the grand scheme of things, but it is another straw on the camel’s back and it shows (as if we didn’t already know) that the government is incompetent and has no clue on what to do to fix the economy.

The government is basically doing the opposite of what it should be doing if the politicians really did want to fix the economy.  Hold on to your hat because it is going to be a bumpy ride until things shake out.