Unless you have been living in a cave for the past year, the world is in economic turmoil. Our Government has been warning us to brace ourselves as the unemployment rate is set to soar.

In order to cushion the fall of the looming recession most people received the Federal Government’s stimulus package. The idea being that money would find its way back into the community via retail expenditure and thus stimulate the economy which in turn would protect retail employees jobs, small businesses etc

But did this money end up where it was supposed to end up? The most likely answer to this question is ”maybe” — but we will probably never really know for sure whether the intended effectiveness of the package was actually achieved

Putting aside for a moment claims that millions of stimulus dollars were wasted on people that would have absolutely no impact on our economy (e.g. expats, dead people etc) - as scandalous as this is — can Government adequately justify the overall cost of the initiative, given the extent overall economic activity has been stimulated?

Of course Government will argue that had it not been for the stimulus, we would be in a much worse place than we are today. This may be so, but how could anyone claim this with absolute certainty? Was there a cost/benefit analysis and if so what was the result? Where is the research

Did the benefits really outweigh the cost? No doubt this question will be argued over and over as we (the taxpayer) set about repaying the money through higher taxes.

And then there is the Paradox of Thrift. The paradox states that if everyone saves more money during times of recession, then demand will fall and will in turn lower total savings in the population because of the decrease in consumption and economic growth. That is, if nobody spends the money it would be a terrific waste.

In arguing the effectiveness of the stimulus its necessary to observe the paradox and measure what percentage of the population left the stimulus package in the bank in fear they may need to call upon the money to pay debts and bills in the event they lose their job. With personal debt levels at record highs and the increased degree of uncertainty, this prospect is not out of the realms of possibility.

Then we need to look at what percentage of money actually stayed in Australia (protecting Australian manufacturing). In other words, had consumers only been able to spend the cash on Australian manufactured goods, we would know for certain that every dollar spent was being spent as effectively and efficiently as it could be. Naturally, this was never going to happen as Harvey Norman would probably be able to testify in light of his increased TV sales

It would have been nice to receive a flyer from the Government a week or so before receiving the cash, identifying various products and services that were 100% Australian (kind of like the catalogues Harvey Norman sends out) guiding me to where the dollars should be spent

Or even further, had the Government imposed a condition being that you can only have the $900 if you spend half of it on something 100% Aussie; like Bundaberg Sugar, a Bonds singlet or an Akubra

Had this been a condition, I just may have potentially used the cash to do just that - too late now though, my Rudd dollars paid off my credit card bill, the electricity, half the phone bill and $20 of petrol in the car. What’s more, I know I’m not alone in choosing to spend the money this way. I know heaps of people used the cash to relieve a bit of pressure brought about by indebtedness - and who could blame them for spending the money in this way

For many people, the thought of finally paying a credit card on time or going a week without having to borrow money from their parents is a welcomed relief.

Of course, $900 only goes so far and for people on low incomes with high levels of debts, the relief brought about by a once off Government handout is short lived.

Handouts are all well and good but do they attend to the underlying issues? Of course the answer is no and for many the cold hard truth of being in debt continues as before. The $900 bonus may have momentarily distracted the wolves from the door, but they once again have the scent

Like never before, now is the time to address the issue of being in debt. If you are struggling, contact a debt management specialist and speak to someone about regaining control of your finances through refinancing your mortgage, consolidating your debt, reviewing your budget or looking at more efficient, better ways to handle your money

One thing’s for sure, waiting on further stimulus packages is not the answer.