Sunday, May 20, 2012

The Economy is based on Demand

The Economy is based on Demand for Goods and Services.
Additional demand is what tells Business to go out and Hire New Employees.
No Additional Demand, No New Jobs.
Give a million dollar tax break to someone that makes 10 million a Year.
That extra million ends up in a stock portfolio of some other investment.
The Velocity of that million dollars is Zero.
New Demand is Zero.
Give that same Million to the People at the bottom.
That Million dollars goes BACK into the Economy at the Speed of Light.
It gets spent on Food, Housing, Gas, utilities.
The Velocity of that Million is Very High.
Every place that money is spent sees New Demand.
The New Demand At the BOTTOM creates NEW Jobs.
Tax Cuts for the Wealthy do NOT.



daniel noe said...

You are not wrong, but neither are you 100% right. Job creation is a function of the entire economy and we are all interconnected. I'm curious what you think of social credit theory (see We may be able to hammer out some common ground. Essentially, under social credits, everyone would be given an equal amount of newly printed money (assuming the economy was growing), but in such a way so that rather than driving inflation, demand would exactly match production.

Gary said...

Robert Heinlein was a believer in that theory.