In any and every economy, the larger the ââ¬Åmarginal propensity to consumeââ¬Â the greater the ââ¬Åvelocity of moneyââ¬Â. The ââ¬Åvelocity of moneyââ¬Â is how many times each dollar is spent, over a given period of time. Obviously, economies with high MPC's and a corresponding, high velocity of money will be stronger and healthier than those economies with low figures for those statistics. This can be illustrated with simple arithmetic.
We'll take one poor person, one middle-class person, and one rich person. The poor person (like all poor people) has a marginal propensity to consume of 100% - that is, poor people can be expected to spend all of every dollar they receive. The middle-class person has a marginal propensity to consume of 50%. Meanwhile, the rich person has a marginal propensity to consume of 10%.
While these numbers are purely hypothetical, the MPC's of the ââ¬Åpoor personââ¬Â and the ââ¬Årich personââ¬Â are very close to actual numbers ââ¬â only the middle-class MPC has been changed, in order to illustrate the principle more clearly.
Armed with only this one piece of information, it is instantly obvious that a government gets more ââ¬Åbang for its buckââ¬Â by putting any/every dollar of ââ¬Åstimulusââ¬Â into the hands of poor people (and the middle class) than in the hands of the rich. It also makes it instantly clear that there is zero validity for the mantra of right-wingers: ââ¬Åtrickle-down economicsââ¬Â.
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To demonstrate this, suppose the government has $100 ââ¬Åstimulusââ¬Â dollars to allocate. If the government gives it all to the poor, 100% of that money (all $100) is instantly spent (and then re-spent by the 3rd party receiving payment). If we give all the money to the middle-class person, $50 is immediately spent (and re-spent). If we give all the money to the wealthy, only $10 dollars actually makes it into the general economy to be spent and re-spent. The vast majority of any and all charity for the wealthy is simply hoarded ââ¬â benefiting no one.
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When Wall Street and the U.S. government were engaged in their bubble-blowing escapades over the last decade, where was the money of the ultra-wealthy?
Was it being invested in new roads and factories? No. It was piled into the derivatives market, the banksters' unregulated quadrillion-dollar casino, where mountains of leveraged debt large enough to dwarf the size of the entire global economy are guaranteed to destroy our financial system when implosion finally occurs.
cont on link....
http://www.bullionbullscanada.com/i...t-salvation&catid=47:us-commentary&Itemid=132
We'll take one poor person, one middle-class person, and one rich person. The poor person (like all poor people) has a marginal propensity to consume of 100% - that is, poor people can be expected to spend all of every dollar they receive. The middle-class person has a marginal propensity to consume of 50%. Meanwhile, the rich person has a marginal propensity to consume of 10%.
While these numbers are purely hypothetical, the MPC's of the ââ¬Åpoor personââ¬Â and the ââ¬Årich personââ¬Â are very close to actual numbers ââ¬â only the middle-class MPC has been changed, in order to illustrate the principle more clearly.
Armed with only this one piece of information, it is instantly obvious that a government gets more ââ¬Åbang for its buckââ¬Â by putting any/every dollar of ââ¬Åstimulusââ¬Â into the hands of poor people (and the middle class) than in the hands of the rich. It also makes it instantly clear that there is zero validity for the mantra of right-wingers: ââ¬Åtrickle-down economicsââ¬Â.
--------------------------
To demonstrate this, suppose the government has $100 ââ¬Åstimulusââ¬Â dollars to allocate. If the government gives it all to the poor, 100% of that money (all $100) is instantly spent (and then re-spent by the 3rd party receiving payment). If we give all the money to the middle-class person, $50 is immediately spent (and re-spent). If we give all the money to the wealthy, only $10 dollars actually makes it into the general economy to be spent and re-spent. The vast majority of any and all charity for the wealthy is simply hoarded ââ¬â benefiting no one.
---------------------------
When Wall Street and the U.S. government were engaged in their bubble-blowing escapades over the last decade, where was the money of the ultra-wealthy?
Was it being invested in new roads and factories? No. It was piled into the derivatives market, the banksters' unregulated quadrillion-dollar casino, where mountains of leveraged debt large enough to dwarf the size of the entire global economy are guaranteed to destroy our financial system when implosion finally occurs.
cont on link....
http://www.bullionbullscanada.com/i...t-salvation&catid=47:us-commentary&Itemid=132
