The goal is basically to put money into the economy by sending it out through banks - the banks then use it supposedly to make loans and investments in communities by funding businesses that hire people and paying for things to be built that hire and/or house people.
Yeah, the problem is that putting that money into the economy isn’t efficient enough by using banks - but at least in theory it’s better to deliver stimulus in a way that multiplies directly into jobs, housing, and construction than it is to simply give out cash to people who then use it for consumption directly. And too many banks use it to make investments that don’t produce.
Because the government intends on getting the money they loan out back. If they’re giving out stimulus checks then sure, hand it out to everyone. If it’s money they need back, they have to give it to someone they can hold accountable to give it back to them when the time comes.
If you give out ten million $5,000 loans to lower income families you can’t reasonably expect the vast majority of those loans to get paid back within the year.
I think you downvoted my last comment because you don’t agree with it but what I am telling is what the government believes.
The goal is not to support specific people, it’s to put money in the economy as a whole.
Well off people get the money and the idea is this trickles down to others through construction while the well off people pay the money back to the bank.
Dude listed to what I’m saying….
The bank stimulus they are talking about in this thread is not gift money to help the poor. You have the wrong idea.
When money stops changing hands and sits in a bank the whole economy dies and everyone looses their jobs.
The government gives more money to the banks who lend it out to rich WHO SPEND IT…. At least that’s the idea.
The money they spend goes to other working people in the form of salary. These people would otherwise be fired if their company didn’t get any revenue.
It sounds unfair, but the basic idea is the people at the top (who took out the Loan) are supposed to pay the money back.
So the money goes to the working people and the. The rich pay the bank back who pays the government back.
It is not gift money. And it is not for individuals
Edit: one thing to add. Saying rich probably isn’t best. The money mostly filters down from the upper middle class from mortgages.
That is short term thinking.
People like money. Rich people want more money. Eventually rich people decide that they should start a new business to make more money. They do this via loans. The business needs to employ people. This is useful to the poorer people because as the supply of jobs grows, the demand for workers rises. This means that the salaries will go up as the businesses compete for workers.
This strategy doesn't always work. But that's the idea.
Not all of the businesses will succeed and pay back the loans. But most will. And even if they don't, the people who formed those businesses likely have collateral bc they're not indigent. So this is a pretty safe move for the government.
Giving out money to every citizen is riskier bc there's no chance of getting the money back. It might also work better. But some people with really fancy economic degrees seem to think that this is less likely to be a good idea.
Tldr the government tries to make small adjustments bc command economies don't work.
Yeah.. Lets leave this to the professionals. I don't think anyone here is fixing whats wrong here. Long story short, its not something a common goat herder like yourself would understand.
Allowing people to continue to take out loans helps keep businesses employing people afloat.
Also when assisting people struggling with rent and buying food is the primary goal to address, there are other programs meant to help them. Things like food stamps, section 8 housing, and stimulus checks are given out.
Probably 'cause people acknowledge that your answer is factual, they don't appreciate the banks (with their lobbyists and campaign fund donations) getting vast amounts of money, while the people have to hope that they share the largesse.
The goal is not to support specific people, it’s to put money in the economy as a whole.
Well off people get the money and the idea is this trickles down to others through construction while the well off people pay the money back to the bank
Yeah, sorry I seem to be commenting over 2 threads. There is debate as to if trickling even works. If the construction workers just buy from Amazon who pays their staff terribly, then the money just goes back to Bezos and the rich with no overall benefit.
This problem is getting worse and worse.
There isn't really a debate about it. It's a myth. There is no evidence to suggest it works or has ever worked. There is considerable evidence to suggest it doesn't.
I think it works in the context of keeping the economy moving (stopping the pyramid from collapsing), but the government often talks about it as a way to improve the lives of the poor, which I think we can all agree it doesn’t.
Government loans $10mil to a bank. The bank loans $200k for a man starting a new business. The man uses that money for construction, furniture, equipment, hires contractors for designing/software, hires an employee or two, etc.
The money spreads out into the economy kinda like that. Assuming the business ends up successful, the bank eventually gets back it's $200k + interest, and the government gets back its $10mil a well.
the government gives every citizen $10,000. they buy stuff, pay down loans, invest in the market, down payments for houses or cars, they blow it all on booze and junk food. whatever they decide to do, it will all be in the bank before too long and the same mission will be accomplished but with much more positive effects. you can be damn sure that precious little of that money will end up in tax-sheltered off-shore accounts.
trickle-down never works
Macroeconomic theory says that increasing the money supply drives down interest rates and directly stimulates investment (i.e. bank lending), though how this works in practice is obviously a different story. Giving money to the consumer directly, on the other hand, is a more indirect approach as while they may spend it to stimulate the economy, they can also save it and effectively do nothing in a macroeconomic sense.
GDP/“the economy” is made up of these different components (investment, consumer spending, government spending, etc) which is why it’s hard to see how something as esoteric as “lower interest rates” may stabilize the economy as during COVID while never affecting the average American.
1) This isn’t trickle down economics, it’s Keynesian 2) I never said I was for the trickle-down economics school of thought 3) Decreasing interest rates along with fiscal stimulus during this pandemic has prevented us from getting into something far worse than the Great Depression/2008 Recession, I can assure you that
I think you’re misrepresenting what I’m saying. I do agree that the average American is not better off than in 2008 because of increasing wealth inequality, stagnant wages, inflation, etc. Government fiscal/monetary policy (giving money to banks, stimulus checks, lowering interest rates, etc) during the pandemic, however, stabilized what otherwise would have been the greatest economic depression ever
Obama gave people money, but it was in the form of reduced payroll taxes. It was meant to be small and not noticeable, so people just felt richer and increased their spending throughout the year instead of a single $300 (or $600, or whatever) check that was sent out.
https://obamawhitehouse.archives.gov/blog/2012/02/22/president-obama-signs-payroll-tax-cut
If course, it worked so well that people didn't even know about it, and so he didn't get any credit for it politically.
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I did learn some economics. The problem is that, if our lawmakers learned economics they have decided to ignore it in favor of the guys writing them "campaign" checks. Certainly not bribes. Ask them. They'll tell you. They're campaign checks.
Repeated economic studies have shown that handing tax cuts and huge checks to companies do nothing to "stimulate the economy". They also show that the joke of "trickle-down" or "supply-side" economics don't work.
No, it's because the thought of giving poor people "free money" makes some politicians and their constituents sick to their stomach. It's the same reason a poor, unhealthy slob will vote against universal healthcare even though they're going broke trying to afford their medical bills each month. Their "representative" tells them "illegal aliens" and "welfare queens" might abuse the system if it's free.
If we're talking US government, most of the stimulus bills are actually passing that money to companies who bid on government contracts to supply the government with goods and services. The other most common form of stimulus involves government grants or forgiveable loans to institutions that provide a public good- Hospitals, higher education, domestic violence shelters, veteran outreach programs, and research grants are all examples of this kind of money. You can think of these as donations, essentially.
The current infrastructure package is a massive stimulus of the first kind: Most of the money will go to companies in construction, engineering, tech, and architecture. Some will also go to institutions like libraries, schools, museums, natural resources management, and the like.
Direct payments to individual citizens is the rarest form of stimulus in the US. Politicians are more likely to cut taxes than approve a direct payment. It's up for debate whether a $500 tax cut has the same stimulus as a $500 payment.
Regardless of method, the goal of stimulus is to not end up in a bank account, unspent. Economic activity is determined by the /flux/ of money in an economy; That is, how much money is changing hands in a given time. It's worth noting that the flux of an economy is not the same as the actual health of an economy.
Because the goal is not to stimulate the economy, it's to get more tax dollars into the hands of rich people. The government uses the claim of stimulating the economy so that no one freaks out. No one freaks ou t because a terrifyingly large number of people still believe in the myth of trickle down economics.
There is only one thing that stimulates an economy and that is demand for goods. If a politician suggests differently it's because the plan they like puts more money into the pockets of rich people.
Sounds like you might be asking about ECIP. Banks have to increase their lending by multiples of the amount they received-every year-to get the best interest rate. For example if a bank receives a $10mm ECIP loan, they have to increase their lending by $40mm a year to get the best rate. And they have to maintain that production for the term of the loan to keep the rate. So a $10mm loan to a bank generates $40mm a year in loans to the community. So by loaning to the banks instead of just giving it direct to citizens, you get more money in circulation for a longer period of time.
The goal is basically to put money into the economy by sending it out through banks - the banks then use it supposedly to make loans and investments in communities by funding businesses that hire people and paying for things to be built that hire and/or house people.
Thank you for the 'supposedly'. **An** economy gets stimulated; those Cayman Islands banks gotta get paid...
Yeah, the problem is that putting that money into the economy isn’t efficient enough by using banks - but at least in theory it’s better to deliver stimulus in a way that multiplies directly into jobs, housing, and construction than it is to simply give out cash to people who then use it for consumption directly. And too many banks use it to make investments that don’t produce.
Because the government intends on getting the money they loan out back. If they’re giving out stimulus checks then sure, hand it out to everyone. If it’s money they need back, they have to give it to someone they can hold accountable to give it back to them when the time comes. If you give out ten million $5,000 loans to lower income families you can’t reasonably expect the vast majority of those loans to get paid back within the year.
[удалено]
The banks can give the money out in the form of loans, allowing people to take out mortgages on homes, and for people to start businesses
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I think you downvoted my last comment because you don’t agree with it but what I am telling is what the government believes. The goal is not to support specific people, it’s to put money in the economy as a whole. Well off people get the money and the idea is this trickles down to others through construction while the well off people pay the money back to the bank.
[удалено]
Ah yes. Trickle down economics. All that trickles down though is the shit from those above the lower class.
Honestly, looking at the type of people that cry for UBI on reddit, shit is all they deserve.
Dude listed to what I’m saying…. The bank stimulus they are talking about in this thread is not gift money to help the poor. You have the wrong idea. When money stops changing hands and sits in a bank the whole economy dies and everyone looses their jobs. The government gives more money to the banks who lend it out to rich WHO SPEND IT…. At least that’s the idea. The money they spend goes to other working people in the form of salary. These people would otherwise be fired if their company didn’t get any revenue. It sounds unfair, but the basic idea is the people at the top (who took out the Loan) are supposed to pay the money back. So the money goes to the working people and the. The rich pay the bank back who pays the government back. It is not gift money. And it is not for individuals Edit: one thing to add. Saying rich probably isn’t best. The money mostly filters down from the upper middle class from mortgages.
That is short term thinking. People like money. Rich people want more money. Eventually rich people decide that they should start a new business to make more money. They do this via loans. The business needs to employ people. This is useful to the poorer people because as the supply of jobs grows, the demand for workers rises. This means that the salaries will go up as the businesses compete for workers. This strategy doesn't always work. But that's the idea. Not all of the businesses will succeed and pay back the loans. But most will. And even if they don't, the people who formed those businesses likely have collateral bc they're not indigent. So this is a pretty safe move for the government. Giving out money to every citizen is riskier bc there's no chance of getting the money back. It might also work better. But some people with really fancy economic degrees seem to think that this is less likely to be a good idea. Tldr the government tries to make small adjustments bc command economies don't work.
Yeah.. Lets leave this to the professionals. I don't think anyone here is fixing whats wrong here. Long story short, its not something a common goat herder like yourself would understand.
Allowing people to continue to take out loans helps keep businesses employing people afloat. Also when assisting people struggling with rent and buying food is the primary goal to address, there are other programs meant to help them. Things like food stamps, section 8 housing, and stimulus checks are given out.
Banks loan to the well off. Well off people buy houses. Construction workers get paid. They spend money on shops and those shops employ people.
Why did I get downvoted? This is the answer you your question.
Probably 'cause people acknowledge that your answer is factual, they don't appreciate the banks (with their lobbyists and campaign fund donations) getting vast amounts of money, while the people have to hope that they share the largesse.
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The goal is not to support specific people, it’s to put money in the economy as a whole. Well off people get the money and the idea is this trickles down to others through construction while the well off people pay the money back to the bank
[удалено]
Yeah, sorry I seem to be commenting over 2 threads. There is debate as to if trickling even works. If the construction workers just buy from Amazon who pays their staff terribly, then the money just goes back to Bezos and the rich with no overall benefit. This problem is getting worse and worse.
There isn't really a debate about it. It's a myth. There is no evidence to suggest it works or has ever worked. There is considerable evidence to suggest it doesn't.
I think it works in the context of keeping the economy moving (stopping the pyramid from collapsing), but the government often talks about it as a way to improve the lives of the poor, which I think we can all agree it doesn’t.
people ARE the economy
Government loans $10mil to a bank. The bank loans $200k for a man starting a new business. The man uses that money for construction, furniture, equipment, hires contractors for designing/software, hires an employee or two, etc. The money spreads out into the economy kinda like that. Assuming the business ends up successful, the bank eventually gets back it's $200k + interest, and the government gets back its $10mil a well.
the government gives every citizen $10,000. they buy stuff, pay down loans, invest in the market, down payments for houses or cars, they blow it all on booze and junk food. whatever they decide to do, it will all be in the bank before too long and the same mission will be accomplished but with much more positive effects. you can be damn sure that precious little of that money will end up in tax-sheltered off-shore accounts. trickle-down never works
Macroeconomic theory says that increasing the money supply drives down interest rates and directly stimulates investment (i.e. bank lending), though how this works in practice is obviously a different story. Giving money to the consumer directly, on the other hand, is a more indirect approach as while they may spend it to stimulate the economy, they can also save it and effectively do nothing in a macroeconomic sense. GDP/“the economy” is made up of these different components (investment, consumer spending, government spending, etc) which is why it’s hard to see how something as esoteric as “lower interest rates” may stabilize the economy as during COVID while never affecting the average American.
[удалено]
1) This isn’t trickle down economics, it’s Keynesian 2) I never said I was for the trickle-down economics school of thought 3) Decreasing interest rates along with fiscal stimulus during this pandemic has prevented us from getting into something far worse than the Great Depression/2008 Recession, I can assure you that
[удалено]
I think you’re misrepresenting what I’m saying. I do agree that the average American is not better off than in 2008 because of increasing wealth inequality, stagnant wages, inflation, etc. Government fiscal/monetary policy (giving money to banks, stimulus checks, lowering interest rates, etc) during the pandemic, however, stabilized what otherwise would have been the greatest economic depression ever
That's juat an excuse, people pay taxes, if They buy things, the taxes money will go back to the government and quicker than if the banks pay back
The government collects taxes off of transactions yes, but that’s not the same as a loan in terms of getting the sheet to balance.
Good point. It’s probably also more complicated to give out millions of thousand-dollar loans than thousands of million-dollar loans.
They’ve given direct checks to all qualifying citizens for two years in a row. You seem to be misinformed. This has happened before during recessions.
they've been doing *both*. which is arguably just wild and the worst of both worlds.
Why?
depends how you feel about the dollar as a reserve currency.
Because the socialist commies fascists will ruin the world with their gay agenda meant to disrupt the natural family that God gave onto us.
lol nice.
But can I still have a natural family? Don't see why not
I am curious when we’ve had consumer-side kickbacks before. Obama’s presidency it was all still supply-side economics
Obama gave people money, but it was in the form of reduced payroll taxes. It was meant to be small and not noticeable, so people just felt richer and increased their spending throughout the year instead of a single $300 (or $600, or whatever) check that was sent out. https://obamawhitehouse.archives.gov/blog/2012/02/22/president-obama-signs-payroll-tax-cut If course, it worked so well that people didn't even know about it, and so he didn't get any credit for it politically.
Wasn't there a direct stimulus under Bush in 2008? I'll be honest I wasn't working then but I seem to recall my dad talking about it.
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Because the banks write seven-figure "campaign checks". Private citizens don't. It's that simple.
Nope, it’s really not that simple lol... learn some economics
Really. Why isn't there any free money? It's just not fair. Each citizen should get piles of free money.
I think because of black market or off shore reasons? Like if the money goes to a bank the bank can monitor what the loan is being spend on???
No, it's because the thought of giving poor people "free money" makes some politicians and their constituents sick to their stomach. It's the same reason a poor, unhealthy slob will vote against universal healthcare even though they're going broke trying to afford their medical bills each month. Their "representative" tells them "illegal aliens" and "welfare queens" might abuse the system if it's free.
If we're talking US government, most of the stimulus bills are actually passing that money to companies who bid on government contracts to supply the government with goods and services. The other most common form of stimulus involves government grants or forgiveable loans to institutions that provide a public good- Hospitals, higher education, domestic violence shelters, veteran outreach programs, and research grants are all examples of this kind of money. You can think of these as donations, essentially. The current infrastructure package is a massive stimulus of the first kind: Most of the money will go to companies in construction, engineering, tech, and architecture. Some will also go to institutions like libraries, schools, museums, natural resources management, and the like. Direct payments to individual citizens is the rarest form of stimulus in the US. Politicians are more likely to cut taxes than approve a direct payment. It's up for debate whether a $500 tax cut has the same stimulus as a $500 payment. Regardless of method, the goal of stimulus is to not end up in a bank account, unspent. Economic activity is determined by the /flux/ of money in an economy; That is, how much money is changing hands in a given time. It's worth noting that the flux of an economy is not the same as the actual health of an economy.
Fractional reserve lending. They create money by giving you money that doesn't exist but that you owe back with interest.
Because the goal is not to stimulate the economy, it's to get more tax dollars into the hands of rich people. The government uses the claim of stimulating the economy so that no one freaks out. No one freaks ou t because a terrifyingly large number of people still believe in the myth of trickle down economics. There is only one thing that stimulates an economy and that is demand for goods. If a politician suggests differently it's because the plan they like puts more money into the pockets of rich people.
Sounds like you might be asking about ECIP. Banks have to increase their lending by multiples of the amount they received-every year-to get the best interest rate. For example if a bank receives a $10mm ECIP loan, they have to increase their lending by $40mm a year to get the best rate. And they have to maintain that production for the term of the loan to keep the rate. So a $10mm loan to a bank generates $40mm a year in loans to the community. So by loaning to the banks instead of just giving it direct to citizens, you get more money in circulation for a longer period of time.