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majorrich's avatar

Would this economic stimulus program be Trickle-up economics?

Asked by majorrich (14721points) September 7th, 2011

I’ve been thinking economic stimulus, I would be happy with a million dollars. I would find myself incredibly stimulated. Intuitively I believe that it would be cheaper for the Govt. to give each taxpaying household one million dollars of their own money. That would get spent in short order, and stimulate the bejeebers out of the economy. 300million vs. Trillions. Sounds like a good experiment to me! I volunteer!

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9 Answers

wundayatta's avatar

Lead to severe inflation. It would be trickle-disaster economics!

zenvelo's avatar

Well, $1 million for 114 million households would be $114 Trillion hitting the economy all at once. If half got spent within 3 months, it would be a huge inflation. For example, if half the households bought a new car, that would be10 times US vehicle production, so dealers would charge the full amount plus a markup.

If half the people bought a house, real estate would be back to bidding wars and house prices would jump overnight.

Interesting idea, but the inflation would eat up the benefit.

gorillapaws's avatar

The first thing I would do with my check is offshore it with a stable world currency (e.g. the Australian Dollar), the result of this is no stimulative effect, and a weakening of the US dollar internationally (this happens whenever you exchange dollars for something else). Rich people have been doing this from their Reagonomics gains for years (which is part of the reason why trickle-down economics doesn’t actually trickle down or stimulate things very well in proportion to their costs).

tedd's avatar

While giving everyone a million dollars is rather impractical….. Stimulus via giving the poor money is usually better than giving the money to the rich. The poor are far more likely to spend it than the rich.

crazyivan's avatar

Yeah, if you’re one of those people who put all their faith in stuff like empirical evidence the most effective type of stimulus is unemployment checks, the least effective is tax breaks for the wealthy.

Well… I suppose setting the money on fire would be slightly more effective than giving it back to the wealthy, but I’m not sure that’s been tested.

tedd's avatar

@crazyivan I would pay to see that.

rojo's avatar

Money for nothing does not work at either end of the spectrum (although if it was offered, I would not turn it down) It would be better for the government to create actual jobs by re-creating a WPA/CCC type program and funnel the money directly to the new employees. It should be evident by this time that providing funds to the weathly and/or corporations does not create jobs, at least not here in the US. The programs could be used to rebuild and repair infrastructure, provide research and development for those things that are not, at this time, economically viable. It would, in turn, stimulate private sector jobs by having more people employed who will spend their paycheck for goods and services.
This would be a trickle up effect that would not have the inflationary effects others have mentioned here.

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