And again......Follow

You know, without food stamps, the local grocery stores around here would not be able to support themselves. I was a cashier during the Bush administration, and I can tell you a good 80% of everyone who bought food did so using food stamps.

There is more to food stamps than "free food for poor people." It's money that is spent and creates growth like anything else.

I support this endeavor, but the posts should go to help the posting middle class (1,000-5,000 posts). We're shrinking, and the middle class is a key indicator of forum health.

All signs suggest that the middle class puts posts to good use; investing them in key forums to work towards one day owning a title.

What good does it do to prop up the one-post survey makers, who contribute nothing to the forum? The forum elite won't even miss the posts. Save the posting middle class!

By that definition, it is impossible to reach any economic growth. All transactions result in a transfer of money in exchange for goods or services, which is exactly what you said is valueless to the economy.

The transfer is valueless by itself (well, except to the degree that it aids in increased production of some kind). The generation of goods and services which we transfer that money *for* is quite valuable. That's the part that I suspect is just not sinking in. No amount of us handing money back and forth actually creates more money. More correctly, the total economic value that money represents cannot increase unless the total productive output that the money represents increases.

Imagine we have an economy which consists of 5 pencils. Now, imagine we decide that rather than handing pencils back and forth, we print up 5 dollars, each one representing a pencil. No amount of us moving the dollars around causes more pencils to appear in our economy. Only if someone goes out and makes another pencil does the economy "grow". It's the creation of something which is useful to someone else which has value. The dollars are only placeholders to make the trade of those outputs easier to conduct. Nothing more.

Now, obviously it's more complicated when we are dealing with consumable items (like food). The transfer of money can create the production of more food (and everything else involved with it), but that's only a net positive *if* the money used to purchase more food actually represents production itself. I've tried to explain this several times now, and the funny thing is that every response has been focused on every other part of my posts. Which suggests that most of you simply don't understand the concept I'm trying to explain. For increased demand in one part of the economy to actually create economic growth, it has to be demand driven by increased productive output in the first place. In other words, if our workforce is more productive and earns more money, than spending that extra money in stores will create more growth. More correctly, that's a symptom and feedback effect from already creating growth. It starts with increased total productivity and results in increased demand, which in turn makes additional increased productivity worth doing.


When that extra demand in one part of the economy results not from an overall increase in productive output, but merely because we transfered money from a one person to another (or a whole bunch of people), it wont have the same effect. That's because we start with a negative (we took money from someone) *and* because the market "knows" that there's no actual increase in total real productive value. We can certainly make one sector of the market more successful, but always at the cost of making another sector fail in an exactly equal and opposite manner.


The pitfall most Keynesian economists fall into is that because the currency is "floating", they make the mistake of assuming that it's not tied to anything. That it's just imaginary. In fact, this is often taught in school. Everything is just worth what people think it is (including money). It's all an illusion, so you can manipulate things to make them appear more or less valuable and it really makes it so. But that's only partly correct. While the value of everything is not based on the quantity of gold or silver in our system, is is based on the total quantity of all goods and services produced by the economy. That's still a matter of perception, but it has very real and measurable relative valuation. We can say that we produced more goods this month than last, or more people were employed this year than last, etc. And elements within the economy certainly act on relative quantities of money available to them.

Taking money away has a negative effect. Putting money someplace else has an equal positive effect. If your objective is social in nature (you think that rich people should have less money and poor people need to eat), then this is an acceptable means to achieve that goal. But it is an absolute mistake to think that this will create positive economic outcomes. It wont. It can't.


I just don't know how many different ways I can explain this concept.

That's not what I said. It can't create growth. Period. You're still failing to see the difference between one part of the economy, and the whole. On the whole, no growth will happen overall. One sector of the economy may grow, but at the expense of another shrinking. Again, this is basic math.


In addition to that fact, in this specific case it not only can't create growth, overall, but isn't even going to create growth in just the one targeted sector. As I said, all the people on food stamps today who were employed and not on food stamps a year ago, purchased food a year ago. Therefore, the total amount of demand for food didn't increase. We didn't make more people or more mouths to feed. We just changed the way they pay for their food.

So in this case, we have a negative in the form of those people losing their jobs and thus not producing anything (or as much). This means that the stuff they would have purchased (like food) isn't being purchased anymore. To counter that, we create a second negative by taking money from other sectors of the economy. We then use that to buy food for those people. So the food market stays exactly the same, the economy loses the productivity those workers were doing while employed *and* the people who were taxed a bit more to pay for the food stamps lose as well.


In this case, it's worse than the normal case for monetary transfers. We have two negative effects and zero positive. How on earth anyone can try to spin this as a positive is pretty amazing!

Apparently in Gbajiland, if something is purchased by food stamps, it doesn't need to be replaced. No farmer has to grow more food, no shippers have to ship it, it's just a big null.

Queue: But you're missing the POINT!! It's so obvious!!

Here's a thought on food stamps and there benefits. Low income households have access to more food then they would normally. They can eat slightly better. This leads to better health. Better health = better education = better jobs = economic growth.

Stop attributing your own lack of understanding to me. Of course the food has to be replaced. But here's the thing: The things that would have been purchased with the money if it hadn't been taken and turned into food stamps are now not being replaced. Get it? Exact same amount of money. Whether the money taken would have been used to buy something, or invest in something doesn't matter. The economic effects that money would have generated are gone and replaced with the economic effects of buying food.


In the best case scenario, this just balances out. The economy loses in one area and gains the exact same amount in another.


But in this case, it's lose/lose. As I have explained three times already, the people who represent the increase in food stamps didn't just magically appear out of a "poor person generating machine". They were employed last year and aren't this year. They were buying the same amount of food last year as they are this year. Get it? There is zero increase in food consumption, thus zero increase in food restocking, thus zero increase in the number of people employed doing those things. Zero economic gain. How many times do I have to explain this?


Holy hell some of you are dense!

Not nothing. But the left's calculations of the economic benefits of doing this assume that every penny they take is "idle money". It's not though. Unless it was literally hidden under a mattress and not being used, it's not idle. Specifically, if it's being taxed, it's being used. We tax economic activities, right? So whatever they were doing that caused them to pay taxes is what the money was doing. So, it's money they earned via their labors, or money they spent buying something, or money they invested in some way.



Banks are the primary means by which money circulates through the economy. I know we like to have this image of them just stuffing money into a big vault, but that's really not the case.



Banks are still lending quite a bit of money and I disagree with the notion that money paid to a bank somehow leaves the economy, but honestly this is beside the point.

Imagine that the tax dollars we take come from someone who's struggling to pay their mortgage, or student loans, or car payment. When you are in that state, what do you stop doing? Do you just not pay the mortgage, or car payment, or student loans? Or do you stop buying other things you don't really need first? It's the latter, right? The point being that in those cases you list off, the biggest impact is going to be in exactly the area the Dems propose to stimulate by doing this: Consumer demand.


You're just moving it from one place to another.



I'll say this again, if your reason for doing this is social (we need to feed people who can't feed themselves), then this is a legitimate rationale. The problem is when idiots like the AG Secretary try to argue that it's somehow a good thing for the economy that more people are on food stamps this year than were on food stamps last year, and attempts to use a completely bogus imaginary economic stimulus argument to support that claim.

Can we agree that this is *not* a good thing?



You're not turned around. Just missing the bigger picture I think.

Right you're diminishing consumer spending by funneling it through the government, who may or may not be spending it in a way that has a good return. My argument is that the American people are already doing this though. They're taking income that they would normally spend on consumer goods and using it to pay down debt. Partly because they have an awful lot of it, and partly because of fear of what may happen in the future. If they aren't going to be pumping it into the economy, why not have the government take it and do that for them?

As for money leaving the banks and heading back to the people, I don't have good numbers on how much lending has returned to the housing market (as an example or where there previously was a lot of return), and whether or not that's anywhere near the levels it was before. It does seems businesses aren't hiring yet, which is another nice way to return the money to the common-folk.

Share if you have something? Or perhaps have a better example of this money coming back into the system, again economics isn't my thing.





Right, I'm hearing what you're saying. It's not necessarily a great thing from an economic point of view, social responsibilities set aside for the moment of course.



I've been over-fixating on this private-sector debt thing for a while. Just can't shake the idea that while our government may have a terrible financial mess on their hand, they still aren't anywhere near as bad off as the private sector at the moment. Normally I'm into looking for a pretty good return on investment from a government program, or at least a compelling enough social cause, but I don't know at the moment. As much as everyone is complaining about run-away government spending, at least they're doing some spending right now.

What I'm looking for is for the private sector to stop paying down debt, and start putting a larger percentage of their income into consumer goods. Until that happens I'm wondering how much the government should do in the meantime to minimize the downturn. I suppose it's a drop in the bucket compared to GDP, and I'm not convinced they really have the leverage to make things much better or worse.

I dunno, I'm rambling now.






Edited, Aug 18th 2011 3:20pm by someproteinguy

Edited, Aug 18th 2011 3:21pm by someproteinguy

Enough time and compression, and boom. Oil problem gone too!

Yes, it was.



Lol! He said that in response to a new report about an increase in the total number of people on food stamps Joph. He was attempting to spin a clear negative economic indicator into a positive by saying that those people being on food stamps were actually creating jobs!

Context is everything.



He said it was "the most direct stimulus you can get in the economy during these tough times."

It was a moronic thing to say Joph. The economic math itself is extremely questionable, and it's certainly the wrong thing to say in the context he said it. It's like talking about a rise in child abductions and making a point to say that people tend to donate to children focused charities when such cases occur and then concluding with "Child abductions really are the best way to raise awareness for those charities and increase the amount of donations they receive".

Edited, Aug 18th 2011 3:56pm by gbaji