The President signed the economic stimulus plan into law today. This plan is a bipartisan effort that will put $150 billion into the liquid economy by sending anywhere from $300-$600 to every tax paying American. You would think that a check from the government would make people happy, but never have I heard more criticism of a program that gives away money, the loudest from people who don't really understand how this could help the economy.

What good is this going to do? The complainers have been saying that the small amount of money they get is not going to do anything to help the economic situation. They say people will just spend it on goods made in China and send it out of the country, or just put it in their savings. The language they use to complain usually contains the words "stupid," "idiotic," etc. Many ask, "why not just give us a tax credit instead of sending us money?" This question, more than any other, shows how little they understand why this is being done.

It's really simple economics. It's not about your measly $600, it's about the whole amount of money that is being injected into the economy. It doesn't matter who the money is given to to use - it just matters that 150 billion dollars is suddenly put into our economy. It just so happens that they decided to send it to every American taxpayer. Whether the money is spent on a product from China or something made in the United States, the only thing that matters is that the money will move from one entity to another. That is the key.

How is wealth created? Money doesn't just get printed when it's needed. That's what countries used to do (some still do) to alleviate strains on their economy. Your economy is going into recession? Well, print more money. The problem with that is while that may cause a short-term alleviation of recession, it also raises inflation, as the money becomes worth less. If our government simply printed 150 billion dollars and injected it into the American economy, inflation would rise, and we'd have a disaster.

Wealth is created when money moves. Even if a portion does eventually end up in China, it will pass through several hands before it gets there. And every transaction will stimulate growth and create wealth. Think about it. You get money, you save some and you spend the rest. Some of that money is taxed, some earns interest, etc. In the end that money that came to you has gone to someone else, but you have gained something in the use of it. The same amount of money, as it goes through each pair of hands allows the acquisition of something, the payment of something else, the reward of a day's work, etc. On top of it, taxes and interest are paid, depending on its use. Wealth was created each time that money moved.

So what happens when the government injects 150 billion in cash into the economy? It is important to note that the government is not simply printing this money because it suddenly needs it. This is money that already exists, but is not moving in the economy, so inflation is not really a concern. What happens is that money will be put into motion and create substantially more wealth than would have been created had the money not been made available. That's why a tax credit would not create the same effect, as a credit puts no money in motion, it just saves people some money.

So, in the end, I think the economic stimulus plan is a good idea, and I will welcome my $600 check when it comes. To those who still think it's a dumb idea, send your check along to me. I'll make sure it's used to create wealth, and be happy to do so.