$1.5 Trillion Dollars

[Elixir]

IANAE (I am Not An Economist), but can't help wondering -
What would the effect be upon the economy if each of the 1,500,000 poorest people in the Country were give a million dollars each?
Again, IANAE, but don't see how putting that much money into the economy could do anything but help. It would take all those people off Federal assistance, and most of that money would be SPENT in short order, on GOODS and SERVICES, rather than disappearing down the rabbit hole of billionaires' pockets.
Does anyone here have the knowledge of macro-economics to say definitively whether that is the case, or if I'm missing something here?

 

[thebeave]

IANAE (I am Not An Economist), but can't help wondering -
What would the effect be upon the economy if each of the 1,500,000 poorest people in the Country were give a million dollars each?
Again, IANAE, but don't see how putting that much money into the economy could do anything but help. It would take all those people off Federal assistance, and most of that money would be SPENT in short order, on GOODS and SERVICES, rather than disappearing down the rabbit hole of billionaires' pockets.
Does anyone here have the knowledge of macro-economics to say definitively whether that is the case, or if I'm missing something here?

Well, if you want an idea of the outcome, look what happens when poor people win the lottery. A lot of the money initially would end up in the pockets of jewelry dealers, luxury car makers, unscrupulous friends & family, followed by a zero bank balance within a few years. Not sure its a productive use of taxpayer money.

http://www.nydailynews.com/life-style/tragic-stories-lottery-winners-article-1.2492941

Nearly 70% of lottery winners end up broke within seven years. Even worse, several winners have died tragically or witnessed those close to them suffer.

 

[Loren Pechtel]

IANAE (I am Not An Economist), but can't help wondering -
What would the effect be upon the economy if each of the 1,500,000 poorest people in the Country were give a million dollars each?
Again, IANAE, but don't see how putting that much money into the economy could do anything but help. It would take all those people off Federal assistance, and most of that money would be SPENT in short order, on GOODS and SERVICES, rather than disappearing down the rabbit hole of billionaires' pockets.
Does anyone here have the knowledge of macro-economics to say definitively whether that is the case, or if I'm missing something here?

Major inflation, in a few years most of them would be back on welfare. We would be worse off than if it hadn't been done in the first place.

Not to mention all those that would die from the fighting over the flood of money pouring into the illegal drug market. And the overdoses.

 

[Derec]

Why not just skip the middleman and adopt the leaf as currency?

 

[Jason Harvestdancer]

Why not just skip the middleman and adopt the leaf as currency?

We'd all become immensely rich but inflation would be a huge problem. Then we'd have to adopt a deforestation problem to combat inflation.

 

[thebeave]

I imagine a lot of the poor people are poor because they have gambling addictions. Let's say conservatively 100 out of the 1.5 million people were poor because of a gambling addiction. And you want the government to blindly give them 1 million dollars. There's 100 million of taxpayers money down the drain. Yet we're outraged when Uncle Sam spends 10 million on some stupid boondoggle or "bridge to nowhere" type project.

Why not find out why these people are poor in the first place and address their needs on an individual basis? If they are mentally ill, spend money on getting them treatment and meds. If they don't have job skills, train them for a career. If they live in too expensive an area, help them move and find work elsewhere, etc, etc.

 

[Elixir]

These conservative responses are exactly what I expected. They ignore the stimulus of 1.5 trillion being dropped right into the economy, and taking 1.5 million people off the handout rolls for a few years, which would save even more. I agree that most of them would fritter away most of it - but disagree about the overall effect of that frittering. Sales taxes would recoup some 5-8% of it for the government, and those jewelry dealer, car dealers etc. would also frequent more restaurants, buy more crap, pay more income tax etc....
All the responses so far fail to address the overall macro-economic difference between handing 1.5t into billionaire pockets and going to Corporate stock buy-backs, vs. putting that money directly into the economy. And that was my question.

 

[Harry Bosch]

These conservative responses are exactly what I expected. They ignore the stimulus of 1.5 trillion being dropped right into the economy, and having them off the handout rolls for a few years would save even more. Sales taxes would recoup some 5-8% of it for the government, and those jewelry dealer, car dealers etc. would also frequent more restaurants, buy more crap etc....
All the responses so far fail to address the overall difference between handing 1.5t to billionaires and going to Corporate stock buy-backs, vs. putting that money directly into the economy. And that was my question.

I'm not sure that I understand your question. But I think that giving the $1.5 trillion (I thought that you said earlier Trillion not billion?) would be marginally better than giving it to Billionares or for stock buy-backs. Equity purchases should not be paid by the government.

 

[Harry Bosch]

I imagine a lot of the poor people are poor because they have gambling addictions. Let's say conservatively 100 out of the 1.5 million people were poor because of a gambling addiction. And you want the government to blindly give them 1 million dollars. There's 100 million of taxpayers money down the drain. Yet we're outraged when Uncle Sam spends 10 million on some stupid boondoggle or "bridge to nowhere" type project.

Why not find out why these people are poor in the first place and address their needs on an individual basis? If they are mentally ill, spend money on getting them treatment and meds. If they don't have job skills, train them for a career. If they live in too expensive an area, help them move and find work elsewhere, etc, etc.

Totally agree. A tax on anyone is a drain on the economy. So if we do, we should make it productive. We should be boosting up people. Helping them to become more productive. Even the playing field. Lift people up. Economic development. Encouraging training, school, and etc.

- - - Updated - - -

I imagine a lot of the poor people are poor because they have gambling addictions. Let's say conservatively 100 out of the 1.5 million people were poor because of a gambling addiction. And you want the government to blindly give them 1 million dollars. There's 100 million of taxpayers money down the drain. Yet we're outraged when Uncle Sam spends 10 million on some stupid boondoggle or "bridge to nowhere" type project.

Why not find out why these people are poor in the first place and address their needs on an individual basis? If they are mentally ill, spend money on getting them treatment and meds. If they don't have job skills, train them for a career. If they live in too expensive an area, help them move and find work elsewhere, etc, etc.

Totally agree. A tax on anyone is a drain on the economy. So if we do, we should make it productive. We should be boosting up people. Helping them to become more productive. Even the playing field. Lift people up. Economic development. Encouraging training, school, and etc.

- - - Updated - - -

I imagine a lot of the poor people are poor because they have gambling addictions. Let's say conservatively 100 out of the 1.5 million people were poor because of a gambling addiction. And you want the government to blindly give them 1 million dollars. There's 100 million of taxpayers money down the drain. Yet we're outraged when Uncle Sam spends 10 million on some stupid boondoggle or "bridge to nowhere" type project.

Why not find out why these people are poor in the first place and address their needs on an individual basis? If they are mentally ill, spend money on getting them treatment and meds. If they don't have job skills, train them for a career. If they live in too expensive an area, help them move and find work elsewhere, etc, etc.

Totally agree. A tax on anyone is a drain on the economy. So if we do, we should make it productive. We should be boosting up people. Helping them to become more productive. Even the playing field. Lift people up. Economic development. Encouraging training, school, and etc.

 

[BH]

In my opinion all of these talks about economics are fruitless. There is no way to get the poor into the middle class without costing those well off or in middle class already a lot of money, dragging their standard down. There is no way to do this or that without this or that somehow coming back and biting us in the butt in some other way. Rasing the minimum wage will hurt us somehow but not raising it hurts people too, yada, yada, yada. Same with universal health care, universal this and that, wage limits and scales and so on. You name it it always bites in the butt and there never is a solution to a problem. Why waste time talking about all of this?

 

[Harry Bosch]

In my opinion all of these talks about economics are fruitless. There is no way to get the poor into the middle class without costing those well off or in middle class already a lot of money, dragging their standard down. There is no way to do this or that without this or that somehow coming back and biting us in the butt in some other way. Rasing the minimum wage will hurt us somehow but not raising it hurts people too, yada, yada, yada. Same with universal health care, universal this and that, wage limits and scales and so on. You name it it always bites in the butt and there never is a solution to a problem. Why waste time talking about all of this?

The white working class is motivated by religion, guns, and football. Giving them handouts is just going to make them mad (ie Trump giving farmers handouts). They'll accept it. But they won't change their vote based on who gives them the most.

 

[Elixir]

First, yes - I did say trillion (what it would take to give `1,500,000 people $1,000,000 each) or the amount that Trump stole from our children for the benefit of the already-rich. Nobody got "lifted up", encouraged to be productive etc. for all that money.

...we should make it productive. We should be boosting up people. Helping them to become more productive. Even the playing field. Lift people up. Economic development. Encouraging training, school, and etc.

I don't think anyone here would argue against that. So... to that end ... Don't you think that at least some small fraction of a percent of those hypothetical 1.5 million recipients would elect to invest in their own betterment?
I came up with this question while thinking about that tax giveaway of which POTUS is so proud (as if he had anything to do with it beyond lending his signature). What effect has it had, or will it have? Would something as ridiculous as handing out $5,000 to each and every US citizen have had more of an effect? No, just a few more overdoses, medical bills, maybe some household appliances sold... Then I started thinking about giving away all of it to the most needy (lowest income) 20%... and yeah, that seemed like an improvement. But still - $25,000 is enough for some poor people to improve their lot, but not enough to get a four year degree or be an apprentice to a trade for very long. ... From there it seemed a small leap to imagine the poorest 1.5 million people getting a really potentially life-changing million dollars each. (I'd stipulate that it would be forfeit if the recipient was susequently convicted of a felony). While most of those people would almost certainly "waste" most or all of that money, their doing so would go to support various businesses and it could be a significant shot in the arm for them. I disagree with the idea that a lot of it would gp to drugs given how little it costs for opiods, fenatyl etc to kill someone.
I'm not advocating this hypothetical as a practical option, just a thought experiment. I think it would be great - economically. But human nature being what it is, it would be a cultural disaster, as anyone near but above the cutoff line would be up in arms at the injustice of it. Still, I believe that prosperity and wealth come from the bottom up, accumulates at the top, and never "trickles" back down. At some point, the top decides to purchase the government, and the long path from democracy to totalitarianism to bloody revolution is set apace. I won't live long enough to see that cycle happen in the US, but we are definitly treading that path at an accelerating rate.

 

[Harry Bosch]

First, yes - I did say trillion (what it would take to give `1,500,000 people $1,000,000 each) or the amount that Trump stole from our children for the benefit of the already-rich. Nobody got "lifted up", encouraged to be productive etc. for all that money.

...we should make it productive. We should be boosting up people. Helping them to become more productive. Even the playing field. Lift people up. Economic development. Encouraging training, school, and etc.

I don't think anyone here would argue against that. So... to that end ... Don't you think that at least some small fraction of a percent of those hypothetical 1.5 million recipients would elect to invest in their own betterment?
I came up with this question while thinking about that tax giveaway of which POTUS is so proud (as if he had anything to do with it beyond lending his signature). What effect has it had, or will it have? Would something as ridiculous as handing out $5,000 to each and every US citizen have had more of an effect? No, just a few more overdoses, medical bills, maybe some household appliances sold... Then I started thinking about giving away all of it to the most needy (lowest income) 20%... and yeah, that seemed like an improvement. But still - $25,000 is enough for some poor people to improve their lot, but not enough to get a four year degree or be an apprentice to a trade for very long. ... From there it seemed a small leap to imagine the poorest 1.5 million people getting a really potentially life-changing million dollars each. (I'd stipulate that it would be forfeit if the recipient was susequently convicted of a felony). While most of those people would almost certainly "waste" most or all of that money, their doing so would go to support various businesses and it could be a significant shot in the arm for them. I disagree with the idea that a lot of it would gp to drugs given how little it costs for opiods, fenatyl etc to kill someone.
I'm not advocating this hypothetical as a practical option, just a thought experiment. I think it would be great - economically. But human nature being what it is, it would be a cultural disaster, as anyone near but above the cutoff line would be up in arms at the injustice of it. Still, I believe that prosperity and wealth come from the bottom up, accumulates at the top, and never "trickles" back down. At some point, the top decides to purchase the government, and the long path from democracy to totalitarianism to bloody revolution is set apace. I won't live long enough to see that cycle happen in the US, but we are definitly treading that path at an accelerating rate.

I'm against strict handouts. In my experience, they just don't work. I'm an Indian and grew up on a reservation. The handouts led to 90% unemployment. OTOH, I have a friend who belongs to a local tribe in Washington. They don't practice giving people handouts. But they do invest heavily in local industry. They encourage companies to move into their area and employ members. They invest in technology incubators. They partner with local businesses in expansion projects. They want to lift people up and encourage people to work.

 

[untermensche]

Giving people money who will spend it will stimulate the economy a lot more than giving rich people tax breaks.

 

[laughing dog]

US GDP now is about 19 trillion dollars, so 1.5 trillion is about 1/12 or 8.5% of GDP. All other things equal, if that one time transfer was simply printed dollars and all of it is spent and if there is no increase in domestic production or imports, one would expect inflation to increase by about 8.5% this year (and maybe into next year), and then inflation would move back to its trend path. Any stimulated increase in domestic production or imports or savings would reduce the effect on inflation.

Now, if that transfer was financed from shifts in gov't outlays, then there is no reason to expect a major effect on the current rate of inflation or GDP at all.

Finally, if that transfer was financed by new taxes, then the effect on GDP and inflation would depend on the tax effect on production and the induced spending and imports.

 

[Elixir]

First, yes - I did say trillion (what it would take to give `1,500,000 people $1,000,000 each) or the amount that Trump stole from our children for the benefit of the already-rich. Nobody got "lifted up", encouraged to be productive etc. for all that money.

...we should make it productive. We should be boosting up people. Helping them to become more productive. Even the playing field. Lift people up. Economic development. Encouraging training, school, and etc.

I don't think anyone here would argue against that. So... to that end ... Don't you think that at least some small fraction of a percent of those hypothetical 1.5 million recipients would elect to invest in their own betterment?
I came up with this question while thinking about that tax giveaway of which POTUS is so proud (as if he had anything to do with it beyond lending his signature). What effect has it had, or will it have? Would something as ridiculous as handing out $5,000 to each and every US citizen have had more of an effect? No, just a few more overdoses, medical bills, maybe some household appliances sold... Then I started thinking about giving away all of it to the most needy (lowest income) 20%... and yeah, that seemed like an improvement. But still - $25,000 is enough for some poor people to improve their lot, but not enough to get a four year degree or be an apprentice to a trade for very long. ... From there it seemed a small leap to imagine the poorest 1.5 million people getting a really potentially life-changing million dollars each. (I'd stipulate that it would be forfeit if the recipient was susequently convicted of a felony). While most of those people would almost certainly "waste" most or all of that money, their doing so would go to support various businesses and it could be a significant shot in the arm for them. I disagree with the idea that a lot of it would gp to drugs given how little it costs for opiods, fenatyl etc to kill someone.
I'm not advocating this hypothetical as a practical option, just a thought experiment. I think it would be great - economically. But human nature being what it is, it would be a cultural disaster, as anyone near but above the cutoff line would be up in arms at the injustice of it. Still, I believe that prosperity and wealth come from the bottom up, accumulates at the top, and never "trickles" back down. At some point, the top decides to purchase the government, and the long path from democracy to totalitarianism to bloody revolution is set apace. I won't live long enough to see that cycle happen in the US, but we are definitly treading that path at an accelerating rate.

I'm against strict handouts. In my experience, they just don't work. I'm an Indian and grew up on a reservation. The handouts led to 90% unemployment. OTOH, I have a friend who belongs to a local tribe in Washington. They don't practice giving people handouts. But they do invest heavily in local industry. They encourage companies to move into their area and employ members. They invest in technology incubators. They partner with local businesses in expansion projects. They want to lift people up and encourage people to work.

I think the plight of the Native American is somewhat unique, and requires unique solutions. Aside from that, I wasn't talking about handouts as we know them, but a million dollars per person. The "bottom" .5% would probably include many of the poorest in NA communities anyhow... and that would create lots of local opportunities for business. Every hundred qualifiers in a very poor community suddenly constituting $100m in "disposable" income would have to have some noticable broader effect on the community - question is what would it be? Not that of "handouts", I suspect.

 

[Horatio Parker]

I prefer a job guarantee. Some of those people have talents that we need. Let them be productive.

 

[Elixir]

I prefer a job guarantee. Some of those people have talents that we need. Let them be productive.

That sounds good. IHow far would 1.5 trillion dollars go in that kind of effort and how and where could it be applied?

 

[Horatio Parker]

I prefer a job guarantee. Some of those people have talents that we need. Let them be productive.

That sounds good. IHow far would 1.5 trillion dollars go in that kind of effort and how and where could it be applied?

At least five years worth, probably more since programs like food stamps would become far less expensive.

 

[Loren Pechtel]

These conservative responses are exactly what I expected. They ignore the stimulus of 1.5 trillion being dropped right into the economy, and taking 1.5 million people off the handout rolls for a few years, which would save even more. I agree that most of them would fritter away most of it - but disagree about the overall effect of that frittering. Sales taxes would recoup some 5-8% of it for the government, and those jewelry dealer, car dealers etc. would also frequent more restaurants, buy more crap, pay more income tax etc....
All the responses so far fail to address the overall macro-economic difference between handing 1.5t into billionaire pockets and going to Corporate stock buy-backs, vs. putting that money directly into the economy. And that was my question.

It would save more to have them off the rolls for a little while?!?!

The reality is that when poor people get windfalls it quickly gets squandered on luxuries.