By Ron Paul, Special to CNN:
A year after a nearly $800 billion stimulus package was passed, the U.S. economy still finds itself mired in mediocrity.
Economic growth is stagnant, unemployment remains higher than almost any time since the Great Depression and millions of Americans are upset that trillions of taxpayer dollars have been committed to numerous government bailout programs with no improvement of the economy within sight.
They question, rightfully, is where this money is going and why it hasn’t been as helpful as the government has claimed.
The problems with stimulus packages are manifold. The primary reason they fail is because they do not address the roots of the problem. If you are unable to identify the cause of your problem, then your solution is doomed to fail.
In the case of the current economic crisis, it had its root in loose monetary policy and easy credit that skewed the allocation of resources within the economy.
Combined with other measures to promote home ownership, these easy money policies caused a massive housing bubble. Money that would have been put to other uses was used to produce raw materials, hire workers and loaned to homebuyers, all while home prices spiked…
[continues at CNN]