“an imbalance between rich and poor is the oldest and most fatal ailment of all repub

Discussion in 'Economics' started by nutmeg, Jul 10, 2010.

  1. In any and every economy, the larger the “marginal propensity to consume” the greater the “velocity of money”. The “velocity of money” is how many times each dollar is spent, over a given period of time. Obviously, economies with high MPC's and a corresponding, high velocity of money will be stronger and healthier than those economies with low figures for those statistics. This can be illustrated with simple arithmetic.

    We'll take one poor person, one middle-class person, and one rich person. The poor person (like all poor people) has a marginal propensity to consume of 100% - that is, poor people can be expected to spend all of every dollar they receive. The middle-class person has a marginal propensity to consume of 50%. Meanwhile, the rich person has a marginal propensity to consume of 10%.

    While these numbers are purely hypothetical, the MPC's of the “poor person” and the “rich person” are very close to actual numbers – only the middle-class MPC has been changed, in order to illustrate the principle more clearly.

    Armed with only this one piece of information, it is instantly obvious that a government gets more “bang for its buck” by putting any/every dollar of “stimulus” into the hands of poor people (and the middle class) than in the hands of the rich. It also makes it instantly clear that there is zero validity for the mantra of right-wingers: “trickle-down economics”.


    To demonstrate this, suppose the government has $100 “stimulus” dollars to allocate. If the government gives it all to the poor, 100% of that money (all $100) is instantly spent (and then re-spent by the 3rd party receiving payment). If we give all the money to the middle-class person, $50 is immediately spent (and re-spent). If we give all the money to the wealthy, only $10 dollars actually makes it into the general economy to be spent and re-spent. The vast majority of any and all charity for the wealthy is simply hoarded – benefiting no one.


    When Wall Street and the U.S. government were engaged in their bubble-blowing escapades over the last decade, where was the money of the ultra-wealthy?

    Was it being invested in new roads and factories? No. It was piled into the derivatives market, the banksters' unregulated quadrillion-dollar casino, where mountains of leveraged debt large enough to dwarf the size of the entire global economy are guaranteed to destroy our financial system when implosion finally occurs.

    cont on link....

  2. Your post is hard to read because the characters are symbols in places. Can you change that?
  3. It isn't a "post" -- he didn't write the content -- it's just a cut/paste from an obscure website. Q: Why didn't he just post the link rather than a sloppy cut/paste? A: You can't fix stupid...
  4. One of the "most fatal" activities any "Government" can engage in is fostering class warfare. It brings down a society from within, and it's all based on a lie.
    There's not just 1 "pie" (as it were) for all to sup from.
    We can make our own "pies", or empires, according to the native abilities one is born with.
    Some succeed greatly, others fail greatly.
    Nothing will ever change that fact.
  5. You mean pareto?

    You can always have more when there is a surplus of food and natural resources unless there is no unemployment. You have to make the people work that will increase services and output.
  6. xburbx


    in that opening statistic, you didnt include the amount of money 10% for a rich person equals. it also doesnt include where that 10% or 100% is spent or .......invested. how much money does a poor person invest? investing in business or stocks by private individuals creates growth in the economy. this will create competition among the wealthy which in turn creates jobs for the poor to spend their 100% of their income for private individuals to reinvest. welfare, handouts, etc are surefire ways to keep the poor ......poor and eventually collapse an economy. we'll probably see one of our theories proven sooner than later as it stands

  7. Exactly. A severely outdated concept is that there is a finite amount of wealth and the only way of obtaining any wealth is to take it from someone else. All that does is concentrate the wealth to far fewer people, mostly to those that redistribute that wealth, and resulting in more poverty. A few hundred years ago most were subsistence farmers with only a few holding the gold and silver. Now anyone can git edjerkated and make some gold, start a business, make your own job. The greatest obstacle is applying oneself, the next obstacle is the government as it slowly cuts off opportunity.
  8. What happens when money mostly goes to paper economy (CDO, CDS, futures, shares -see P/E ratio-) or to increase asset values (RE) instead to real economy (goods and services and then means to make them)?

    What happen when goods quality plunge so people need to change them more often?

    What happen when "growth" means less jobs?

    What happens when "growth" means more "bean counters" (burocreats) and less productive work?

    Maybe we should deepen a little?
  9. What happens when "growth" means more "bean counters" (burocreats) and less productive work?

    Good point.

    Suppose "growth" is more lawyers, scientists, media and lobbyists to gain control of some portion of the economy, ie climate change or any environmental issues under the headline of energy.

    The current "growth" industry is 1/2 of the people stopping the other 1/2 people from doing something.

    Another "growth" industry is surveliance and data collection. Back in the day this was marketing info, since retail shit the bed, this info comes in handy to prosecute people or keep them unemployed. (drug tests, immigration status, etc.)
  10. I'm not sure of proportion, but agree on trends (even if I do not believe scientist are unproductive people, as you said, at least not all of them).

    The sad part is: this unproductive people do not accept the fact their job is adding nothing to the wealth pie we all share.

    Someone says working poors (young people first of all) have a sense of "entitlement", but maybe they unconsciously understand they're not receiving all they earned?
    Deadbeats exist, I'm sure, but how it is possible that everyday a lot more people working hard cannot anymore afford the same life style they (or their fathers) had 30 years ago?

    Technological advancement (and volumes, everyone working in manufacturing knows that producing hundred millions of items is a lot cheaper -per unit- than producing millions, and world markets for a lot of goods was growing in that way for years, think at PCs or mobiles) should by itself support an improvement, not a plunge of life standards.

    Maybe I'm overlooking something?
    #10     Jul 12, 2010