“In simplest terms, the idea is that stimulus will boost demand by incentivizing borrowing and spending. Ultimately, that will spur economic growth. And it works in the short-term. Economic stimulus creates the illusion of prosperity — that is until the bubbles inflated by the easy money pop.
Stimulus – especially the monetary variety – also has a longterm effect. As economist Dr. Mihai Macovei explains in an article originally published at the Mises Wire, efforts to stimulate growth actually end up hampering growth over the long haul. Macovei uses the case of Japan and its long-running stimulus program to illustrate this point. As you’ll see, the results of decades of stimulus are less than inspiring.”