Every $ spent on Unemployment benefits generates $1.42-1.90 in new economic demand!!!

Discussion in 'Economics' started by S2007S, Dec 1, 2010.

  1. S2007S


    Been researching this for quite sometime and have found out that every time they extend the benefits for the unemployed its as if they are investing in those who aren't working. Its like a risk free return on your investment, however this investment provides money to those who are not working where those who are unemployed receive a dollar of unemployment and in return sink a $1.42 to as much as $1.90 back into the economy.

    So as 2 million start to lose unemployment over the next couple of weeks this will certainly put a damper on the economy as many economists project that the ending of these enemployment benefits would cut consumer spending greatly and reduce the GDP by at least a 1/2 of percent. Many also contribute that the extension far outweighs the "monetary costs".

    Going to be interesting over the next days and weeks to see what they outcome of this news story brings, as I mentioned days ago they will be extending the benefits, maybe not for 3 months but definitely 1 month into the new year.

    Daily updates to follow!!!!
  2. TGregg


    Every time I hear somebody claim that redistributing wealth, punishing producers and rewarding inactivity is the path to prosperity and riches, I always want to extend the idea. Since we can tax and spend our way to fabulous wealth, why don't we go do it? Screw this 99 week thing, how about permanent unemployment? If 99 weeks is sooo awesome then never ending would be even better. And why not make it a really "livable" amount, say 2 large a week?

    Heck, why not just have Uncle Sam send us a check every day for a grand? Nobody would have to work and we'd all be rich! Yay!
  3. Arnie


    So, these 2 million people will just stop spending? More likely they will get a job. This is the fastest way to get unemployment down. I garantee you that if they DO NOT extend benefits there will be at least a 2/10% decrease (9.6 to 9.4) in unemplyment #'s by Feb.
  4. By this logic if we just made everyone unemployed it would be a huge boost. Let's make it so!
  5. pspr


    OK, I'll be the first one to make the pledge. If the government will give me $5,000 a month tax free, I promise to spend at least $9,000 per month. Come on Obama, start my checks! :D
  6. That might sound great at first glance. But it represents a money multiplier of about 1.9 to one. Banks can use the fractional reserve system to loan out $10 for every dollar they have in deposits, which is of course 10 to 1.

    Also keep in mind that the UE benefits are created by debt and the extra 40.5 to $1 added on is created from debt, so there is an interest cost.

    I'm not implying anything negative about UE benefits. Just saying you have to look at the total picture.
  7. Gotta wonder how much of that money has found its way into Apple's products.

    On another note, it fits perfectly the profile of the political economy. It garners support amongst the disenfranchised who are a captive vote, swayed easily by rhetoric regarding halted foreclosures, perpetual unemployment benefits and other freebies. Meanwhile, it is a backdoor subsidy for many, many retail businesses that would be sucking wind without all of this money being passed around.

    I'd also like to get a grasp on just how much fraud is embedded in these perpetual unemployment checks...i.e. how many individuals are working for under the table cash, living on food stamps, not paying their mortgage and collecting these checks as well. Probably a decent percentage of the population has never had it so good by simply gaming the system.
  8. if your UE expires and you've no job you go onto welfare which further stresses the
    individual states' budgets
    imo the GD was made worse Because there was no such thing as UE and welfare
    was severely limited or none at all, together with the belief that there wasn't a severe
    unemployment problem, but if there was the answer was simple that people should
    'just get a job'. it took a couple of years before 'they' got it, but if you're one of the
    75% or 50% who Are employed, what do you care ?
    UE and welfare grease the economic wheels
  9. nickdes


    If U.E. is so good for the economy then why not raise it up to say $2000 week! Our economy would be busting out at the seems in no time. LOL

    While we are at it, raise the minimum wage to 25 bucks a hour!

    America Wake up to these idiots.... : )
  10. Good points. In addition, I wonder how much of every $1 actually goes to the unemployed? It's not like these state unemployment offices are run for free. The whole "mutliplier effect" is full of holes anyway, and if you really break down the numbers, you'd probably uncover many unsavory things about these programs, the perpetually "unemployed" and consumer spending/debt habits.
    #10     Dec 1, 2010