> How can a dollar taken from me by the government and given to a poor person generate a positive cash flow overall?
Changes to th velocity of money in different uses. Dollars aren't consumed when spent, they keep circulating.
> Step 4. My dollar is used to pay the administrative and bureaucratic needs of the system, god bless them if they can do it for less than thirty cents (after healthcare, salaries, fringe benefits, building costs, etc.) my dollar is down to $0.70.
No, it's still a dollar, because spending it transfers it to other people, rather than destroying it. And, with government spending, at the first hop essentially all of that $0.30 is still in the domestic economy.
> Step 4. The money is given to a person in the lower quartile who then spends the $0.70.
Also, again, largely in the domestic economy, and in places where it has a higher velocity in the domestic economy than it would if a richer person spent it.
And that's where the gain in total economic activity comes from.
> If the economists were honest with that statistic, they would admit it is not the percent increase but the turn around time to spend the money
That's exactly what economists say produces the return to the economy / increase in economy activity that GP discusses.
This is Econ 101 stuff.
> or a pull forward to quickly juice the economy.
It's not a pull forward. (There are ways you can do that, too, but downward redistribution isn't really one of them.)
Changes to th velocity of money in different uses. Dollars aren't consumed when spent, they keep circulating.
> Step 4. My dollar is used to pay the administrative and bureaucratic needs of the system, god bless them if they can do it for less than thirty cents (after healthcare, salaries, fringe benefits, building costs, etc.) my dollar is down to $0.70.
No, it's still a dollar, because spending it transfers it to other people, rather than destroying it. And, with government spending, at the first hop essentially all of that $0.30 is still in the domestic economy.
> Step 4. The money is given to a person in the lower quartile who then spends the $0.70.
Also, again, largely in the domestic economy, and in places where it has a higher velocity in the domestic economy than it would if a richer person spent it.
And that's where the gain in total economic activity comes from.
> If the economists were honest with that statistic, they would admit it is not the percent increase but the turn around time to spend the money
That's exactly what economists say produces the return to the economy / increase in economy activity that GP discusses.
This is Econ 101 stuff.
> or a pull forward to quickly juice the economy.
It's not a pull forward. (There are ways you can do that, too, but downward redistribution isn't really one of them.)