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But just saying money is still circulating is very short sighted. Is the velocity is the money the same? Is it circulating among rich or poor? Taxation is norm

But just saying money is still circulating is very short sighted. Is the velocity is the money the same? Is it circulating among rich or poor? Taxation is normally for taking money from the rich and spending on the poor. In this case however, money was taken from the middle and lower working classes, and given to the rich stock owners. And the country got nothing in return, not bridges, trains, or roads. If you give rich people tax breaks and they spend it purchasing and bubbling real estate, your gdp might show good numbers, but money is just circulating among the rich.

EGreg 8y ago
The velocity of money returns to normal after it is spent into the private sector again. It’s just one hop for how it is spent. In the meantime the taxed money may be held in some funds, and those funds may be invested in private banks. We really don’t know. The Grace Commission found that hardly anything from personal income taxes even reaches public works. There is hardly any difference if the government burned all your tax money with their left hand (fiscal policy) and printed shiny new money with their right hand (monetary policy). My point is that the money keeps circulating. Isn’t it short sighted the other way, to act as if it disappeared? Circulating among rich or poor is a different question - of outsorcing, automation, demand for human labor and services, UBI and so on - rather than spending it on the armed forces. Poor people get paid in the armed forces and go spend that money into the economy too. It’s apples and oranges. I’m saying the tragedy is the bombing and destruction, the money found its way back into the economy.
- rohit2412 8y ago
  I don't think the velocity of money returns to normal. Money used to buy a single Ferrari probably circulates less than money used to buy million gallons of milk. This should imply that for higher gdp we must tax the rich and spend on poor. American defense spending spends lesser on the poor, and the country does not even get bridges or trains in return.
  - EGreg 8y ago
    Look, if you traced the money paid to defense contractors vs to the poor you may find that its velocity is the same after a month. Show me that it’s definitely not true. It seems quite plausible.
mrep 8y ago
US Military budget comes from federal taxes which mostly comes from federal income taxes AFAIK and thus the top 1% contribute more than the bottom 90%: "In 2014, the bottom 50 percent of taxpayers (those with AGIs below $38,173) earned 11.27 percent of total AGI. This group of taxpayers paid approximately $38 billion in taxes, or 2.75 percent of all income taxes in 2014. In contrast, the top 1 percent of all taxpayers (taxpayers with AGIs of $465,626 and above) earned 20.58 percent of all AGI in 2014, but paid 39.48 percent of all federal income taxes. In 2014, the top 1 percent of taxpayers accounted for more income taxes paid than the bottom 90 percent combined. The top 1 percent of taxpayers paid $543 billion, or 39.48 percent of all income taxes, while the bottom 90 percent paid $400 billion, or 29.12 percent of all income taxes." [0] [0]: https://taxfoundation.org/summary-latest-federal-income-tax-data-2016-update/ https://taxfoundation.org/summary-latest-federal-income-tax-...
- dragonwriter 8y ago
  > US Military budget comes from federal taxes If the federal budget came from federal taxes, it would be necessarily constrained to them and deficits would be impossible.

EGreg 8y ago

The velocity of money returns to normal after it is spent into the private sector again. It’s just one hop for how it is spent. In the meantime the taxed money may be held in some funds, and those funds may be invested in private banks. We really don’t know. The Grace Commission found that hardly anything from personal income taxes even reaches public works. There is hardly any difference if the government burned all your tax money with their left hand (fiscal policy) and printed shiny new money with their right hand (monetary policy). My point is that the money keeps circulating. Isn’t it short sighted the other way, to act as if it disappeared? Circulating among rich or poor is a different question - of outsorcing, automation, demand for human labor and services, UBI and so on - rather than spending it on the armed forces. Poor people get paid in the armed forces and go spend that money into the economy too. It’s apples and oranges. I’m saying the tragedy is the bombing and destruction, the money found its way back into the economy.

rohit2412 8y ago
I don't think the velocity of money returns to normal. Money used to buy a single Ferrari probably circulates less than money used to buy million gallons of milk. This should imply that for higher gdp we must tax the rich and spend on poor. American defense spending spends lesser on the poor, and the country does not even get bridges or trains in return.
- EGreg 8y ago
  Look, if you traced the money paid to defense contractors vs to the poor you may find that its velocity is the same after a month. Show me that it’s definitely not true. It seems quite plausible.

mrep 8y ago

US Military budget comes from federal taxes which mostly comes from federal income taxes AFAIK and thus the top 1% contribute more than the bottom 90%: "In 2014, the bottom 50 percent of taxpayers (those with AGIs below $38,173) earned 11.27 percent of total AGI. This group of taxpayers paid approximately $38 billion in taxes, or 2.75 percent of all income taxes in 2014. In contrast, the top 1 percent of all taxpayers (taxpayers with AGIs of $465,626 and above) earned 20.58 percent of all AGI in 2014, but paid 39.48 percent of all federal income taxes. In 2014, the top 1 percent of taxpayers accounted for more income taxes paid than the bottom 90 percent combined. The top 1 percent of taxpayers paid $543 billion, or 39.48 percent of all income taxes, while the bottom 90 percent paid $400 billion, or 29.12 percent of all income taxes." [0] [0]: https://taxfoundation.org/summary-latest-federal-income-tax-data-2016-update/ https://taxfoundation.org/summary-latest-federal-income-tax-...

dragonwriter 8y ago
> US Military budget comes from federal taxes If the federal budget came from federal taxes, it would be necessarily constrained to them and deficits would be impossible.