That's the very basic theory of stimulus spending, in theory. Money velocity is the speed at which money flows between people (the economy). If a dollar moves quickly, it can seem like to there is more money than there really is in the economy. Some economists say this is good, others call it illusory. I say if everyone is paying their bills on time and have enough left over to live rather than just survive, it doesn't matter how fast the money is ricocheting around the economy (from and to people).
Picture a pinball flying back and forth between two 100-point bumpers, that's like money velocity during stimulus spending season. We're all racking up points!
Until the ball drops between the flippers. Zero points for that.
Until the ball drops between the flippers. Zero points for that.
In modern America, our economy is like a pinball deck where there are fewer and fewer bumpers and a lot more flippers with spaces in between. When we fire off extra balls (Stimulus) they hit a few bumpers then roll between the flippers and off to China. Zero points for that and that is why Stimulus spending didn't work and will never work again.
Class dismissed.
For the honors students...
Q: So, why did both Republicans and Democrats push for a stimulus package?
A: It gave them a lot (over a trillion dollars) of your children's money to give to their backers. Quid pro quo!
Q.E.D.
For the honors students...
Q: So, why did both Republicans and Democrats push for a stimulus package?
A: It gave them a lot (over a trillion dollars) of your children's money to give to their backers. Quid pro quo!
Q.E.D.
GAME OVER GAME OVER GAME OVER GAME OVER
GAME OVER GAME OVER GAME OVER GAME OVER
GAME OVER GAME OVER GAME OVER
GAME OVER
GAME OVER
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