As you can see food stamps and unemployment insurance are the most effective economic stimulators. You see poor people who would otherwise be not spending money are spending money. Every dollar spent on these programs creates economic growth. Tax cuts on the other hand only slow the economy. Extending unemployment insurance was the heart of Obama's stimulus package. That is why it created 2.5 million jobs. The more facts we learn the more we realize just how much bullshit republicanism really is.
Why Extended Federal Unemployment Benefits Boost the Economy
I'm not sure who is dumber. You or the author of the article. I'm leaning toward you for believing this shit.
What a load of crap. A dollar spent in retail can't possibly inflate itself beyond that dollars end value. If it did then the clerks, truckers and the farmers all had to lose money to bring that dollar item to the consumer.
To provide a dollar item at the store all of those that contributed to the item must have their costs and profit when added up all fall within that dollar. If they can't do that the item must be sold for more money. That means the store has to stock the item, shelve it, pay a cashier and make profit on a portion of that dollar. The trucker has to pay for a driver, the rig, the insurance, the road taxes and profit within a portion of that same dollar. The farmer must also abide by the same guidelines all within a small portion of that dollar.
At no point in this chain can anyone involved exceed that dollar by a single penny let alone another 64 cents. If that happens one or all of them lose money and go out of business.
Here's a really easy explanation of the Multiplier Effect for you.
It's a little complicated but stick with it.
It's got some cool pictures that you can look at when your brain gets tired and you need to rest.
Multiplier Effect Explained | ROM Economics
How does it work?
An injection occurs in the economy, such as an increase in government spending.
The injection increases the aggregate demand in the economy for goods and services.
The increase in demand for goods and services causes firms to employ more workers and expand output.
As firms are employing more workers, more people have disposable incomes and subsequently the aggregate demand increases in the economy.
The increases in aggregate demand causes firms to employ more workers and the effect continues as before.
You have the multiplier effect down to a tee, but you forget a few minor points that makes your analysis sophmoric. All products are not created economically equal, and therefore, all consumer spending is not economically equal. The purchase of food creates little, if any multiplier effect, because the supply is adequate to demand, and no additional production will be created any where in the supply chain. People already have a place to live, and a small increase in their disposable income will not cause them to move, or pay additional rent. Very little multiplier effect.
However, if consumers purchase durable goods like washing machines, dryers, water heaters, automobiles, boats, etc., then the multiplier effect works and works well. Such purchases create a marginal reaction down the production chain, clear back to the miners who mine the iron ore and the copper ore. However, if that production chain is overseas, then the marginal reaction happens overseas, and not here.
Unemployment checks cannot possibly create a multiplier effect, because they merely replace a portion of a much larger pay check, and are therefore marginally negative to the economy. Food stamps have a negligible effect because they cause little if any increase in an already adequate food supply. Excess food is tossed on a daily basis.
A $500 dollar payroll tax reduction, equates to about $42 a month, and is not going to cause any consumer spending sprees. The average person will use it to pay down credit card debt, switch from hamburger to steak once in a while, eat out a couple times per month, or even go see a ball game. Not much multiplier effect anywhere in that scenerio. Just another feel good, see, we are doing something, liberal/socialist lie.
