I found brilliant quote by Mark Steyn today. I'm going to take it here out of context:

We're now told that the problem with the last New Deal is that it was too small, so Obama's new New Deal has to be even bigger. That's like telling New Orleans that the problem is they're not far enough below sea level so they need to dig deeper.

This seems to be the direction the government is taking. Seems being an understatement. The economy is 'in trouble' so the federal government is going to throw money willy nilly at everyone who comes to call. Van Helsing actually gives a much more appropriate analogy:

If you'd like to test out the Keynesian theories that guide Democrats, take on unmanageable expenses until you're as deep in debt as our government, then go out to the shopping mall and max out your credit cards. According to liberals' "theoretical knowledge," it will return you to solvency.

This crisis revolves around people taking on more obligations than they could afford. Simply put, Americans on average spent more money than they earned. This can work in the short term. The whole point of credit cards and even long term loans is to get now and pay later. For long term loans, you typically know what the monthly obligation is and can budget accordingly. You can even do this with credit cards.

But the idea is to eventually pay off the debt, not extend it in perpetuity. This is where the problem lies. You cannot consume more than you produce. A single person can, certainly, but as a whole, people cannot consume more than they produce. If Sony produces 1000 TVs, the people cannot buy 1200 TVs. This is a very basic concept.

And I say production and consumption because I wish to distinguish it from earning and spending. Money is just currency, a measure of the ratio of worth between various goods and services. The ratio is set by supply and demand. The money supply determines the actual unit of worth. Spending more money than you earn does not change the fact that there is only so much stuff to go around. What it does is inflate the money supply. This scales the unit of worth, but doesn't actually change the ratios of worth.

Well, actually it does, because there is a lag time between money supply inflation and price inflation. So it looks like an increase in demand, which affects supply (production). Where it falls apart is where someone remembers that money only represents wealth. Someone says, 'wait a minute, you said you're giving me 1200 TVs, but you only have 1000.' Plus you promised another 1200 to that other guy. When people realize that they cannot meet their material obligations, the economy halts while everyone sorts things out. You can borrow money from the future from now until doomsday, but you cannot borrow stuff from the future. And the economy is made of stuff. Money is just bookkeeping.

Hat Tip: Conservative Grapevine