Robert A Whit
02-17-2013, 03:26 PM
Many have heard of the Laffer Curve. Even fewer heard of Hauser's law.
But how many of you understand the Velocity of money concept?
Briefly, if one sees the economy like a merry go round where you may grab a brass ring per revolution, the faster you spin the machine and collect rings, the larger your collection.
So, how does this concept apply to the economy you may ask.
Some ask what Obama did that is so wrong. His stimulus may have added a small number of jobs, far fewer than he brags about, but if you can get spending to take place over a shorter period of time, at least you can examine the effect.
For instance, stimulus that forces spending almost instantly has a chance to force spending, lets say, 12 times per year. Assuming a 1 time per month happening.
If you pick something like a bridge being built, that spending is slow. It may take many months to get past congress and at last some of it ends up ready to spend. But it is not spent instantly. Government money always has too much paperwork and too many restrictions and tight regulations must be followed.
If you are handed a hundred dollars, you can simply rush to the store and use the money that day. You have no attached regulations for the store to follow as you buy some new product.
Rule 1. Government spent money is spent very slowly.
Rule 2. Privately spent money is spent very fast.
You may in a few days, decide you are entitled to a quick trip lasting perhaps a week. It takes you next to no time to gas up and head out. As you travel, you will spend the amount you planned to spend. That shoots the economy a jolt, though small and it does it fast.
So, if you suddenly have a $1,000 to spend, you can do it fast. As you spend, taxes are collected. (my major point as to this topic) Taxes represent those brass rings.As you spin the money wheel faster and faster, naturally the government receives cash faster and faster. The entire economy moves faster. I speak not of only one person, but millions of us, rushing about to spend money.
When Bush gave out money, he gave it to the millions.
The money Obama passes out for the most part ends up being slowly spent and handed to the rich. The rich don't need that added cash for that vacation I mentioned.
Actually if you are very rich, you own a lot of stocks.
And isn't Obama taking credit for the state of the stock market?
No, if you are rich, he is your man. But the rest of us need a person that can understand how economics works.
So to conclude, a good plan moves money around very fast. And as it moves, taxes are collected.
A bad plan is, well we see how it is working for Obama. That my friends is a bad plan.
But how many of you understand the Velocity of money concept?
Briefly, if one sees the economy like a merry go round where you may grab a brass ring per revolution, the faster you spin the machine and collect rings, the larger your collection.
So, how does this concept apply to the economy you may ask.
Some ask what Obama did that is so wrong. His stimulus may have added a small number of jobs, far fewer than he brags about, but if you can get spending to take place over a shorter period of time, at least you can examine the effect.
For instance, stimulus that forces spending almost instantly has a chance to force spending, lets say, 12 times per year. Assuming a 1 time per month happening.
If you pick something like a bridge being built, that spending is slow. It may take many months to get past congress and at last some of it ends up ready to spend. But it is not spent instantly. Government money always has too much paperwork and too many restrictions and tight regulations must be followed.
If you are handed a hundred dollars, you can simply rush to the store and use the money that day. You have no attached regulations for the store to follow as you buy some new product.
Rule 1. Government spent money is spent very slowly.
Rule 2. Privately spent money is spent very fast.
You may in a few days, decide you are entitled to a quick trip lasting perhaps a week. It takes you next to no time to gas up and head out. As you travel, you will spend the amount you planned to spend. That shoots the economy a jolt, though small and it does it fast.
So, if you suddenly have a $1,000 to spend, you can do it fast. As you spend, taxes are collected. (my major point as to this topic) Taxes represent those brass rings.As you spin the money wheel faster and faster, naturally the government receives cash faster and faster. The entire economy moves faster. I speak not of only one person, but millions of us, rushing about to spend money.
When Bush gave out money, he gave it to the millions.
The money Obama passes out for the most part ends up being slowly spent and handed to the rich. The rich don't need that added cash for that vacation I mentioned.
Actually if you are very rich, you own a lot of stocks.
And isn't Obama taking credit for the state of the stock market?
No, if you are rich, he is your man. But the rest of us need a person that can understand how economics works.
So to conclude, a good plan moves money around very fast. And as it moves, taxes are collected.
A bad plan is, well we see how it is working for Obama. That my friends is a bad plan.