Bush stimulus package.

The CNN reports that the Bush administration will be sending out $600 'rebate checks' to the Americans who pay payroll taxes like SS as part of the stimulus package to ward off the risk of recession in our slowing economy.

As is the case with politicians, there was a lot of haggling over it with the Democrats caving in to the Republicans again for reasons that are unknown to me. And despite the large budget deficit that is one of the causes of the current situation, there are going to be further tax cuts. To finance the deficit increase, the government will have to borrow from the market thus increasing demand for money and increase the interest rates. And guess what is the Federal Reserve trying to do. Yes, lower the interest rates as their way of fixing the economy through monetary policy.

Now, if I get down from the macro economics to my own micro level, I have start thinking about what to do with this $600. Do I spend it like the administration wants me to do, or do I behave a little more irresponsibly (irresponsible for the government but responsible for me) and invest it in a risk free tool like a government bond (basically, lending that money to the government so that it could give it to me, plus tax free interest). Or maybe get a little more risk friendly and put it in the stock market - after all, it's free money and I wouldn't mind if its value went down in the short run.

So many choices.