Friday, August 19, 2011

Re: economics

There is a half truth to this because the unemployed are most likely to spend the money they get.  The question that is never answered or even asked is who pays for it?  Where does the money come from?   Why doesn't the money taken from somewhere else hurt the economy?

The answer is that liberals believe that the cause of the Great Depression was too much money in the hands of the rich people (who by the theory hoard it) and not enough in the hands of the poor people who will spend it to keep the economy buzzing.  However, this was not the real cause of the Great Depression;  Horrible monetary policy caused the Great Depression.  Maybe one could make the case that in today's economy that there are too many people sitting on cash, but that is because there is too much economic uncertainty.  I am not against emergency funding of people who are dire straights, but the real solution is not to increase the burden of government in the typical Keynesian fashion, but to get the government out of the way.  

Sent from my iPhone

On Aug 19, 2011, at 9:46 AM, larry.r.trout wrote:

'Consider what happened last week when Laura Meckler of this newspaper dared to ask White House Press Secretary Jay Carney how increasing unemployment insurance "creates jobs." She received this slap down: "I would expect a reporter from The Wall Street Journal would know this as part of the entrance exam just to get on the paper."

Mr. Carney explained that unemployment insurance "is one of the most direct ways to infuse money into the economy because people who are unemployed and obviously aren't earning a paycheck are going to spend the money that they get . . . and that creates growth and income for businesses that then lead them to making decisions about jobs—more hiring."

That's a perfect Keynesian answer, and also perfectly nonsensical. What the White House is telling us is that the more unemployed people we can pay for not working, the more people will work. Only someone with a Ph.D. in economics from an elite university would believe this.

I have two teenage sons. One worked all summer and the other sat on his duff. To stimulate the economy, the White House wants to take more money from the son who works and give it to the one who doesn't work. I can say with 100% certainty as a parent that in the Moore household this will lead to less work.'

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