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re: What is the economic impact of dropping bags of cash?
Posted on 11/16/14 at 9:01 pm to Taxing Authority
Posted on 11/16/14 at 9:01 pm to Taxing Authority
It depends on where it comes from.
If it was new printed money, it will create inflation, probably a net economic negative.
If it is wealth redistribution as in taken from producers and given to nonproducers, it weakens the incentive to produce and therefore is a net negative.
If it is neither of the above in some theoretical case, it is net nothing, no gain or loss.
If it was new printed money, it will create inflation, probably a net economic negative.
If it is wealth redistribution as in taken from producers and given to nonproducers, it weakens the incentive to produce and therefore is a net negative.
If it is neither of the above in some theoretical case, it is net nothing, no gain or loss.
1
Posted on 11/16/14 at 9:09 pm to Asgard Device
quote:
But if the economic impact is a net positive then isn't that more for everyone? Do people who provide the goods and services bought with the money not pay income taxes? What about all the jobs that it would create? Net positive economic impact. Isn't that the gold standard?
If it were only that easy
It's likely that the money wouldn't have the big local impact that you think it might. There isn't necessarily a multiplier effect. If anything all the money will just get taxed multiple times as it is quickly spent and you'd have a multiplier effect of less than 1.
Posted on 11/16/14 at 9:26 pm to Powerman
If the money is printed, it would have a huge economic boom effect. If it was simply taken by others first, it would have no economic effect.
Printing money and giving it to consumers is a net gain for wealth creation. Taking money and giving it to consumers is a net 0 at best.
Printing money and giving it to consumers is a net gain for wealth creation. Taking money and giving it to consumers is a net 0 at best.
Posted on 11/16/14 at 9:28 pm to HailHailtoMichigan!
quote:How many dollars are in circulation? What happens if we multiply it by a factor of say ten?
Printing money and giving it to consumers is a net gain for wealth creation.
Posted on 11/16/14 at 9:41 pm to Jbird
quote:
How many dollars are in circulation? What happens if we multiply it by a factor of say ten?
Inflation is gradual though
And it can certainly benefit people who have incomes tied to inflation or a mortgage on their home
Posted on 11/16/14 at 9:42 pm to Powerman
quote:What percentage of citizen's are hurt by inflation versus the few who benefit?
And it can certainly benefit people who have incomes tied to inflation or a mortgage on their home
Posted on 11/16/14 at 9:45 pm to Stingray
quote:
If it is wealth redistribution as in taken from producers and given to nonproducers, it weakens the incentive to produce and therefore is a net negative.
Let's explore this statement.
So if it is wealth redistribution taken from the takers and given to producers then it is break-even? If it is taken from producers and given to other producers then it is also break-even, but if the benefactors are poors then it is a net negative?
I'd like to see the math behind that.
This post was edited on 11/16/14 at 9:48 pm
Posted on 11/16/14 at 9:48 pm to Jbird
quote:Does it matter? Printing money does not in and of itself cause inflation.
How many dollars are in circulation?
Posted on 11/16/14 at 9:50 pm to HailHailtoMichigan!
quote:Leave it in a vault?
Printing money does not in and of itself cause inflation.
Posted on 11/16/14 at 9:50 pm to Taxing Authority
quote:
Spending money on trinkets and economically unproductive consumer goods does not increase economic value. It simply consumes natural resources, and promotes waste.
What sort of spending doesn't consume resources? Why is buying food, clothes, air jordans, and big rims considered waste? Is it more wasteful than using resources to create Here Comes Honey Boo Boo Child?
Posted on 11/16/14 at 9:53 pm to Jbird
quote:
What percentage of citizen's are hurt by inflation versus the few who benefit?
Couldn't tell you off the top of my head
But it's certainly something that greatly benefits the rich and hurts the poor.
Posted on 11/16/14 at 9:55 pm to HailHailtoMichigan!
quote:I must be working with the wrong definition of "inflation".
Printing money does not in and of itself cause inflation.
ETA: I guess y'all mean price inflation and not money supply inflation.
Carry on.
This post was edited on 11/16/14 at 9:56 pm
Posted on 11/16/14 at 9:56 pm to Gmorgan4982
There is no reason to expect prices to rise when money is printed.
Posted on 11/16/14 at 9:59 pm to HailHailtoMichigan!
quote:
If the money is printed, it would have a huge economic boom effect
wrong
quote:
Printing money and giving it to consumers is a net gain for wealth creation
Wrong again--printing money is a net gain of money and money is not wealth. Labor and capital and their products are wealth. Money is simply how we keep score.
Printing money is always inflationary relative to the previous money supply.
Dropping bags of cash in neighborhoods--if those bags were taken from the same economy--at best is a break even deal.
Dropping bags of newly printed money in an economy will drive up prices but over the long run will have no real, inflation adjusted impact on the economy.
Posted on 11/16/14 at 10:03 pm to HailHailtoMichigan!
quote:Not immediately
There is no reason to expect prices to rise when money is printed.
Posted on 11/17/14 at 6:05 am to Asgard Device
quote:
Let's say the state decided to drop $100 million in bags of cash on "disadvantaged" neighborhoods.
In one year there would be no difference.
On the other hand, give that $100 million to proven entrepreneurs and tell them the money must be spent on developing businesses in those communities - it won't be pretty, because things change slowly, but that will do everyone a better service.
Don't be mad because it's true.
This post was edited on 11/17/14 at 6:06 am
Posted on 11/17/14 at 6:21 am to Asgard Device
Sounds nice in theory but we all know they'll give it all right back to the state playing the lottery.
Posted on 11/17/14 at 6:27 am to Asgard Device
quote:
The multiplier effect would bring the total economic activity to a net positive, as in more than $100 million right?
Was the 100 Million from out of state? Or, is this Louisiana taxmoney being dropped?
Posted on 11/17/14 at 6:57 am to RogerTheShrubber
quote:
If you're shifting from one sector of the economy, the only people who will believe it's a net positive will be those who benefit. Sure it's great to circulate money but if you're just moving it around, you aren't doing anything revolutionary.
Someone has to manufacture all of those big wheels and fancy cell phone covers...someone has to import them, warehouse them, retail them, build the infrastructure for all of that. It is supply side economics from the bottom up...and the only difference is where the infusion of cash is coming from.
Traditionally it comes from earners keeping more of their own money, bottom side up supply side gets the mooney from those earners and supplies it to the recipients. And that is the rub...and the thing that supply siders should just admit...it sucks to be taxed. It really is as simple as that...you don't have to come up with all sorts of convoluted and often wrong theories as to why it sucks...everyone knows it sucks, plain and simple.
Posted on 11/17/14 at 7:04 am to germandawg
quote:
And that is the rub...and the thing that supply siders should just admit...it sucks to be taxed. It really is as simple as that...you don't have to come up with all sorts of convoluted and often wrong theories as to why it sucks...everyone knows it sucks, plain and simple.
I'm searching for a point here, Dawg - surely you recognize that when taxation rises, the benefits of tax minimization schemes start to override actually engaging in the economic activity - the secondary benefactors - tax deferred investments (shelters) and tax specialists do better in that environment, but you won't get a proportional increase in the activity you want to tax.
Taxing exists largely for 2 purposes - 1 is to raise revenue and another is to punish behavior - much beyond the normal extraction rate (give or take 20%) creates a disincentive to further activity, in favor of these secondary actions. THAT is the point of the supply side theory - not only does it "suck to be taxed" as you so eloquently put it - it also generates diminishing or counter-productive economic returns to the taxing authority - unless the entire point is to depress the taxed activity.
Both of those parts are required to understand the supply side theory.
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