> Again, the multiplier effect is only applicable when dealing with an external input to a system. Otherwise, you are arguing that simply raising prices creates

> Again, the multiplier effect is only applicable when dealing with an external input to a system. Otherwise, you are arguing that simply raising prices creates economic growth which is clearly not true. No, that's not what I'm arguing. I'm arguing that the multiplier of a single dollar is based on the percentage of that dollar that stays in the local economy. > Even given the above, I have no idea why you would assume this to be true. If someone in a foreign country is paid in US Dollars, the most likely thing to do with it is buy US goods or assets. (In the case of China, that is most likely US securities, but it's still not lost to the US economy). Yes, that's why I mentioned that my argument is predicated on there being a trade deficit. The U.S. runs a massive trade deficit, so clearly not all the dollars end up back in the U.S. economy. Buying treasuries isn't really relevant because each dollar the government takes in in exchange for a treasury needs to be paid back out.