Give an entrepreneur some capital. Of course he or she will try to make more money out of it. Infuse the whole society with money. You expect the whole would become more prosperous, since society is nothing but a collection of individuals and they each would all try to make more money.
Wrong!
An individual, with limited extra money, will consume or invest locally and seek relatively short-term paybacks. A corporation would consider wider range of options and longer time horizon. It may choose to make money with capital or people — automate a process with a new machine and let go several employees, for example. When making investment decisions, they will evaluate all ideas and pursue the ones with the highest returns. Given that the stimulus monies are free. High risk investments, if come with potentially higher returns, will be attractive.
And those American corporations have chosen not to invest in the USA.
Does it surprise you that GM put their stimulus money in China? Of course not, China car sales out-pace the rest of the world. It does not take an MBA to figure out where the shareholders want the investments to be. Now, guess where did those big banks put their stimulus money?
The US stimulus pretty much went straight to other countries’ GDPs. That’s why this recovery benefited only corporations but not citizens.
Good thing China is still buying the US’s debts. Keep your fingers crossed.