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Quote:
Originally Posted by Wilfredo Ledezma
That's because they have all the money. It doesn't mean they would do it at a better rate if we gave them more
The question we have to ask is, if we are going to give someone $20, would we give it to the rich or poor in hopes of the highest % of continuous return to the economy.
Or, should we take/give it at all.
Think of it in the reverse though. If you take money away from them in higher taxes, they aren't going to invest in infrastructure in their bidnesses, expand the work force, etc.
But giving out money to the public as a "stimulus" to the economy is about how much of that money will get spent rather than saved, which has to do with both the % of one's wealth a person spends on consumer products and the amount of money the consumer products a person wants to buy actually cost. If the rich get an extra hundred dollars they aren't more likely to buy something extra because that hundred dollars doesn't really buy the things they want and they've already got the cash to buy the things they both need and desire. Where as the poor who HAVE to spend all of their money to just get by are both more likely to spend that hundred dollars and actually want things that can get bought with that hundred dollars. Thus, a stimulus to the poor gets more bang for the buck then a stimulus to the rich. Trickle-down economics doesn't work in any form. Trickle-up economics is the basis of capitalism in the technological age.Quote:
Originally Posted by Wilfredo Ledezma
Yes, as a simple dollar amount the rich (who have all the dollars) have a higher total of dollars spent. They have all the dollars. But the reason McDonalds is a bigger company then say Porche is because everyone can buy a $1 burger but only a few people can buy a $90,000 Porche. You sell cheap products because that's what the majority of the populace can afford and will buy. Not to mention that the more cheap products you make it possible to buy, the more the "stimulus" money gets dispersed throughout the economy and the more areas are helped. It's better for the economy for 90,000 different companies to get $1 than it is for 1 company to get $90,000. That's why people are pissed that so far we've simply given a handful of banks a shit load of money and why it didn't do shit to actually help the situation other than keep those handful of banks from crumbling down on their poorly run asses.
Were they going to do that in this economy anyway?Quote:
Originally Posted by Tahoe
We gave a lot of rich instititutions money to lend, and most of what they've been doing with it is acquiring pre-existing distressed competitors' assets.
Remember, interest is at near-0% and few are borrowing or lending.
Quote:
Originally Posted by Tahoe
^^This was the main point I was trying to make.
The lower and middle-class, especially in today's economy, can't do those types of things even with a stimulus package, but they benefit from those things the most when the wealthy are able to keep more of their income
how do you encourage spending from all income brackets?
I still think Fool and I are right. Giving the rich people an extra couple grand does nothing. They just put that extra money in their accounts and let it rot. I'm not saying that is wrong, they can do whatever they want (it's their money).
But if you take all that money and instead spend it on roads, bridges, new technologies...then you have job creation.
You don't. The key is not spending at all. The key is jobs IMO. I might have the money to spend on things, but with the economy in the crappy I might rather just hold onto my money because I'm not sure when I might lose my job. Giving me some extra money (tax breaks, stimulus checks, whatever) does jack shit. If I lose my job that couple grand does nothing but buy me an extra month maybe. So how does giving people some money help? It does nothing but stall their misfortunes.Quote:
Originally Posted by Wilfredo Ledezma
Instead you create jobs with that money. If people are employed, they can spend in the economy. People who already have jobs won't be tight pockets because when they don't have a fear of losing their job they'll spend more.
Writing checks does nothing for long term growth.
Quote:
Originally Posted by DennyMcLain
An interesting problem is that, being such a comsumer nation, we expect the population to spend and generate flow. However, this does not mean they will buy Ford, or GM, or Catapillar. If Joe Smith decides to purchase a Toyota, then U.S. manufacturers are screwed. Unless, however, it's a Camry, which I believe is considered a domestic model (off the top of my head I cannot determine what % of the car should be from american parts and labor, but the Honda Accord follows the same pattern).
The stimulus package really should have an addendum making domestic products more desirable in both loan packages and direct sales (maybe a government rebate). That would stimulate both retail and U.S. manufacturing numbers.
It could be that I'm hair splitting here but to me it's a good thing for government to pry open credit markets to keep otherwise viable and competitive companies from being sunk by the credit storm.Quote:
Originally Posted by DennyMcLain
On the other hand, something like rebates or any other form of subsidy or price support to keep around companies that simply fail against foreign competition is a loss for the taxpayer/consumer.
I'm much more comfortable with the government stimulating through infrastructure than going around picking winners and losers on a product by product basis.