I haven't studied it but would think all that welfare money is being recycled right back into the economy. I'm all for cleaning up the system but am not there yet on eliminating it completely. I first need an understanding of the effects of any collateral consequences.
Does the fact that the money is going back into the economy, mean that it is a benefit to the economy?
You are focusing on the money, as if the money, is what makes wealth. Money is just a means of exchange. That's all it is. It is a method for exchanging goods and services. That's it.
What makes wealth, is the creation of goods and services.
If you doubt that, just try and imagine if everyone went on welfare. Hey the money goes back into the economy..... wait.... what economy? There is nothing to buy, because no one is producing any goods, or any services. No one is working to produce anything, because they are all on welfare.
See the problem?
My personal system of thinking, is that there are three levels of economic participation. First the consumer. Everyone is automatically a consumer. At a bare minimum you have to eat. So food is a form of wealth, and you consume the food, which means you consume that wealth. Similarly you drive a car, and as it gets old and has more problems, it loses value. You are consuming that wealth.
So everyone is automatically a consumer.
Then you have producers. People who produce something that has value. You produce food, or create parts for a car, or whatever. You are creating something of value, and that adds wealth to the economy.
Lastly, investors. These are people who use their wealth, to create more wealth.
The more investors any economy has, the better off it usually is.
But the more people who are only consuming, without producing, the worse off the economy is.
Saying the currency goes back into the economy is irrelevant. It would go back into the economy no matter what you did with it. Where else would it go? A black hole in space?
Moving money around doesn't grow wealth. If I give you $100, and then you give me $100, what wealth is created in any of those transactions? None. If that's all we do, we're creating no wealth in the economy. But we are consuming wealth, because we still have to eat, drink, and so on.
Welfare is inherently a negative on the economy.