Hopefully, there is someone on this forum who will explain the ''miracle of the fiscal stimulus multpilier''.
According to the stimulus advocates, the Govt spends $1 and, using the Obama team's numbers, you will get $1.5 in output. The multiplier is thus $1.5. Thus, not only will society get the initial $1 back, it will get 50 cents in addition.
I can see how that can work in the long term: roads, power plants, bridges,e.t.c can boost growth by lessening the infrastructural constraints on business activity. However, it takes a while to complete such projects and by the time they are built, America will be out of the recession. Unless you belong to the Roubini school of thought who think this recession will last a considerable lenght of time.
So does anybody know how spending $1 today will bring about $1.5 in output within the next few months?