It may already be difficult to remember, but just a week ago the American economy was seen as slowing, not on a cataclysmic course toward a recession, and the Federal Reserve chairman and his colleagues were not expected to be contemplating a rate cut of 75 basis points. What happened?

The international slide that began less than a week ago cannot be attributed to unexpected financial news. Of course, there were continued reports of weakness in American housing markets and financial institutions. But none of this was novel or unexpected. Yet equities headed south Friday, Monday, and yesterday.

The collective groan from around the world in recent days was a response not so much to any new challenges facing the American economy, but in answer to the ill-advised prescriptions from politicians. Congressional leaders and presidential candidates late last week began devising competing “stimulus” packages focused more on anesthetizing voters with checks than on curing specific economic problems. It is possible the stimulus package would have no tax cuts and nothing to encourage business activity.

The American economy began to sputter last year not because of a want of consumer spending, but because so much of the demand was focused on housing. Many loans were made to households with poor credit risks for housing for which prices had stagnated or declined. Governmental reaction to the bad debts was to appease borrowers, who vote in much larger numbers than do lenders. The result has been twice to the chagrin of lenders: They own bad debts, and the federal government now asks them to bear much of the risk of bailing out borrowers.

The mortgage market is not all that is wrong with the American economy. Another year passed with no signs that the government would seriously begin to address the long-term insolvency of federal health care programs with tens of trillions of dollars of unfunded liabilities. Members of Congress cannot see beyond the next election, but America’s economic problems are much longer term.

Economic slowdowns occur from unexpected shocks: a war, a substantial rearrangement of prices, or, as in the current situation, a failure of financial institutions to accurately or adequately manage the risk of mortgage investments. Shocks cause individuals and firms to reassess the value of long-term decisions and investments. Each of these maladies has a specific remedy, not one cure-all that relieves all economic woes.

During years of growth, even the most demagogic American politician would not resort to the witchcraft of sending checks to individuals as a means of further stimulating economic growth. But economic palpitations cause politicians to be irrational if not exuberant. Congressional leaders, presidential candidates, and, sadly, now even the president, prescribe the narcotic of handing out unconditional money to consumers as a means of relieving the pain of a slowing economy. While politicians seek to find precedents, there are none; prior plans had more nuance and effort at addressing identifiable problems.

Individuals who receive an unconditional check have no additional incentive either to work or to invest. The checks will do nothing to rectify failures in mortgage and other markets. Irrational policies harm efforts to convince the world that America’s government will be solvent in the long run with a creditworthy dollar.

It’s called a “stimulus” package, but it is really a hallucinogenic sedative. Americans will be asked to imagine that the economy is swell and to ignore underlying weaknesses by spending someone else’s money, in this case much of it foreign money loaned to the Treasury. It will have to be paid back on a more sober day.

The more Congress speaks of an ill-conceived “stimulus” package, the more investors became nervous. Deus ex machina, the Fed intervened yesterday with a large rate cut that slowed, if not halted, equity losses. But the Fed cannot intervene every day to distract investors from the elixir that Congress is brewing.

Foreign investors, who won’t receive hallucinogenic checks, can see our economy clearly. They are heavily invested in America. But bad governmental policies will discourage further foreign investment in American securities, including governmental bonds to pay for the “stimulus” program. The next time the American economy falters, the rest of the world may not care as much as they do today.

A former FCC commissioner, Mr. Furchtgott-Roth is president of Furchtgott-Roth Economic Enterprises. He is organizing a seminar series at the Hudson Institute. He can be reached at hfr@furchtgott-roth.com.