If the government sent anyone making less than 100K annually a 40,000 dollar check wont that stimulate the economy?
Sure but remember that all you're doing is robbing from future productivity to stimulate the current economy. If you seriously think that robbing from those that are productive (even if it is in the future) to give to those that are less productive is a good idea......
My inclination is to believe you will be proven wrong in the details simply because I believe human nature will trump economic theory, and no matter how much money disappears into the "black hole of deleveraging" the incentives pressuring debtor nations to print more will be too great to be overcome with mere reason and common sense.
So, you think that if the Gov't goes to the credit markets to finance giving every american who earns under $100,000 a $40,000 'gift' that it will 'stimulute' the economy...making money by spending money (we loose on every dollar but we make it up in volume). So, how many people are we talking about...what is the legal population...300 Million plus? Do you mean to include kids ( I got a laugh when my minor daughter who had a part time summer job got an Obamacrat stimulus check last year...although I was disqualified). Lets say you only mean to include legal adults...but if spending makes money why make a limit; can't we be Krugmanesque? But lets just say we are talking about 100 Million $40,000 checks...., so we are talking 4 Trillion...did I get the zero's right?...Krugman would be proud of you! So, we spend 4 Trillion in gifts to make money! Now, its the govenment that is doing this and it is doing it by selling 4 Trillion in TBills. So, unless you assume that the government will default and not pay this debt back or unless you assume that the debt itself will precipitate gov't insolvency and hyperinfationary currency collapse (very likely); then you must beleive the government will pay the money back and pay the debt service until it does. What will the growth rate be from this spending...what will the tax rate be if you really expect to pay this back and service the debt? Do you see how stupid this proposal is...if you do...then why did you expect the Obamacrat stimulus of 2009-10 to be any different.
But the less productive will buy stuff so the money trickles up to the producers, then they hire people to build more widgets to serve the demand? Which means more of the non producers become productive.
But arent we giving like 4 trillion to bankers? and as financial aid to other countries, cost of protecting north korea,protecting saudi interests etc? already? how much did the war in iraq cost? how did that help our economy?
There is no such thing as a 'non producer' in your model. Really, where do you think wealth comes from...magic? There are only producers and depents of producers....all the money comes from the producers and must be paid by the producers...and who do you think makes the stuff that 'non producers' buy....you don't think its all Made in America do you?
NOb...no we didn't give the banker 4T...figure it out yourself...and if we spent all that money already why are we not rolling in it now... according to your magical thinking? I' m glad I'm short the market, short oil, short europe...so I can suffer this foolishness with while there is still trading goin on.
this is one of the reasons why i doubt the deflation is a threat. chinese simply do not want to work for free for american leeches anymore... http://www.bloomberg.com/apps/news?pid=20601087&sid=a3pcfGPJU6a0&pos=5
From the article: Foxconn will boost monthly pay for most plant workers to 2,000 yuan ($293) from 1,200 yuan effective Oct. 1, the Taipei- based company said in an e-mailed statement late yesterday. Foxconn, also known as Hon Hai Group, on June 2 raised base pay from 900 yuan, effective immediately. They will double their monthly pay to $293!!! There's no way we can compete with that. It's over. How can those wages not affect us, the entire western world? We will never be able to pay our debts. And by the way dhpar, yes, prices will rise as a result of that increase in pay. But overall, over the long term - those wages are deflationary for the entire western world. As the FIRE economy dies, little else will be left. There will continue to be massive defaults.