3 ms·

"Spend" is a loaded term when it comes to the way governments work. If I have $100 then I can choose to spend it on say a book. I have a book, my $100 is clear

"Spend" is a loaded term when it comes to the way governments work. If I have $100 then I can choose to spend it on say a book. I have a book, my $100 is clearly gone. But when the govt spends say $400 mil on a lunar landing, they get the lunar landing, but they also get a bunch of money back. Firstly, a chunk of that money goes to salaries, so a decent chunk comes back as primary taxes (income tax etc) and secondary taxes (sales tax, gas tax, taxes on booze and smokes). What isn't taxes is mostly then circulating in the economy (generating yet more taxes) while giving the economy a nice boost. Now we can argue about opportunity cost etc, but the govt has no issue borrowing all the money they like - so there's no real lost opportunity. We can quibble about edge-case budgets all day long, but its hard to avoid the jobs program that is "military spending". In truth what does all that money buy? The lunar program, the Mars program, curing cancer, these are rounding errors compared to the military budget. I'm gonna get crucified for saying this, but what do invasions of Iraq, or occupations of Afghanistan for 20 years actually really achieve? Instead of picking on NASA it might be time to wonder what the Defence trillions get us? Which brings me back to my first point- most of those trillions circle round in the economy anyway, so its all funny money.

idiotsecant 3y ago
>the govt has no issue borrowing all the money they like - so there's no real lost opportunity This can't be true forever, and to me it seems like it is the underpinning of the entire modern world order. Something seems fundamentally warped, I'm just not educated enough to know what it is.
bradleybuda 3y ago
How is the $100 spent on the book not circulating in the economy?
- tanjtanjtanj 3y ago
  I think what they're saying that the government will get a large amount back and you, personally, will get less than 1% back. So you would effectively be spending $99.99 on the book and the government would effectively be spending $45, as an example.
nickff 3y ago
If you think the moon landing money comes back to the government, the defense money does the same, with the added benefit of providing security! I think both are basically wasted, but that's because I don't buy the premise of your argument. Money is constantly circulating, at a given velocity. Each economic actor chooses a balance of investment and consumption, and spends at a certain rate (some take longer to allocate funds than others). The question for me is whether another actor would have either allocated the money faster, or towards an investment with a higher positive externality. My answer is yes.
- M95D 3y ago
  > If you think the moon landing money comes back to the government, the defense money does the same, with the added benefit of providing security! Did it provide security? I remember 2 towers collapsing...
mananaysiempre 3y ago
> What isn't taxes is mostly then circulating in the economy (generating yet more taxes) while giving the economy a nice boost. This part entangles monetary policy with gov’t spending, which to some extent is politically inevitable, but IIUC is a very bad idea in general[1–3]. [1] https://johnhcochrane.blogspot.com/2020/07/magical-monetary-theory-full-review.html https://johnhcochrane.blogspot.com/2020/07/magical-monetary-... [2] https://www.cato.org/commentary/magical-monetary-theory https://www.cato.org/commentary/magical-monetary-theory [3] https://www.greaterwrong.com/posts/tAThqgpJwSueqhvKM/frequently-asked-questions-for-central-banks-undershooting https://www.greaterwrong.com/posts/tAThqgpJwSueqhvKM/frequen...
hirsin 3y ago
I think it's called "speed of money" or something similar, but I do wonder how much of which federal dollars end up as profit in an account versus circulating the economy. Wages to USPS employees - probably spent very quickly/high speed. Money sent to Raytheon - probably fifty/fifty on IC wages and COGS (high speed, ish) and fat cats (boards, CEOs). Yes, yes, they go put money in the stock market, but that's fairly low speed. My guess is defence spending is much lower speed than NASA or medical programs.
- jmalicki 3y ago
  Usually it's called velocity, not speed, but point stands. https://en.wikipedia.org/wiki/Velocity_of_money https://en.wikipedia.org/wiki/Velocity_of_money
itronitron 3y ago
>> In truth what does all that money buy? If you're a well paid 'military spending' contractor then you can take a nice vacation to the EU and see what the US could afford were the US not spending it all on it's military. Free* health care, free* college, public transit, etc.
churchill 3y ago
I smell a heavy dose of MMT here. First, the government might not have issue borrowing infinitely, but deficit spending/printing cash from thin air leads to inflation. And considering how 'beautiful' that past couple of months have been, I wouldn't dismiss its impact on livelihood. Secondly, the government might distribute money into the economy, but it's always done inefficiently. That's where we get $20k trash cans [0] and $28 million spent on camouflage uniforms that don't blend in (for use in Afghanistan). Arguing that government spending is mostly good because it gets money into people's hands is just the broken window fallacy at work - that cash could have been used for more productive investments in the private sector. Thirdly, I wouldn't trust the ROI figures published by a government agency, especially since the US government has a 'use it or lose it' approach to budget allocation. They have every motivation to just make up figures to channel more cash their way.
mitchitized 3y ago
> I'm gonna get crucified for saying this, but what do invasions of Iraq, or occupations of Afghanistan for 20 years actually really achieve? I'm going to answer with another question. For the past thirty years, how many countries have traded crude oil in currencies OTHER than the dollar, and of those countries, which ones have NOT been invaded by the United States? Petrodollar explained: https://www.wallstreetmojo.com/petrodollar/ https://www.wallstreetmojo.com/petrodollar/ This doesn't really have anything to do with NASA budget but deserves a lot more scrutiny than it gets, IMHO.

idiotsecant 3y ago

>the govt has no issue borrowing all the money they like - so there's no real lost opportunity This can't be true forever, and to me it seems like it is the underpinning of the entire modern world order. Something seems fundamentally warped, I'm just not educated enough to know what it is.

bradleybuda 3y ago

How is the $100 spent on the book not circulating in the economy?

tanjtanjtanj 3y ago
I think what they're saying that the government will get a large amount back and you, personally, will get less than 1% back. So you would effectively be spending $99.99 on the book and the government would effectively be spending $45, as an example.

nickff 3y ago

If you think the moon landing money comes back to the government, the defense money does the same, with the added benefit of providing security! I think both are basically wasted, but that's because I don't buy the premise of your argument. Money is constantly circulating, at a given velocity. Each economic actor chooses a balance of investment and consumption, and spends at a certain rate (some take longer to allocate funds than others). The question for me is whether another actor would have either allocated the money faster, or towards an investment with a higher positive externality. My answer is yes.

M95D 3y ago
> If you think the moon landing money comes back to the government, the defense money does the same, with the added benefit of providing security! Did it provide security? I remember 2 towers collapsing...

mananaysiempre 3y ago

> What isn't taxes is mostly then circulating in the economy (generating yet more taxes) while giving the economy a nice boost. This part entangles monetary policy with gov’t spending, which to some extent is politically inevitable, but IIUC is a very bad idea in general[1–3]. [1] https://johnhcochrane.blogspot.com/2020/07/magical-monetary-theory-full-review.html https://johnhcochrane.blogspot.com/2020/07/magical-monetary-... [2] https://www.cato.org/commentary/magical-monetary-theory https://www.cato.org/commentary/magical-monetary-theory [3] https://www.greaterwrong.com/posts/tAThqgpJwSueqhvKM/frequently-asked-questions-for-central-banks-undershooting https://www.greaterwrong.com/posts/tAThqgpJwSueqhvKM/frequen...

hirsin 3y ago

I think it's called "speed of money" or something similar, but I do wonder how much of which federal dollars end up as profit in an account versus circulating the economy. Wages to USPS employees - probably spent very quickly/high speed. Money sent to Raytheon - probably fifty/fifty on IC wages and COGS (high speed, ish) and fat cats (boards, CEOs). Yes, yes, they go put money in the stock market, but that's fairly low speed. My guess is defence spending is much lower speed than NASA or medical programs.

jmalicki 3y ago
Usually it's called velocity, not speed, but point stands. https://en.wikipedia.org/wiki/Velocity_of_money https://en.wikipedia.org/wiki/Velocity_of_money

itronitron 3y ago

>> In truth what does all that money buy? If you're a well paid 'military spending' contractor then you can take a nice vacation to the EU and see what the US could afford were the US not spending it all on it's military. Free* health care, free* college, public transit, etc.

churchill 3y ago

I smell a heavy dose of MMT here. First, the government might not have issue borrowing infinitely, but deficit spending/printing cash from thin air leads to inflation. And considering how 'beautiful' that past couple of months have been, I wouldn't dismiss its impact on livelihood. Secondly, the government might distribute money into the economy, but it's always done inefficiently. That's where we get $20k trash cans [0] and $28 million spent on camouflage uniforms that don't blend in (for use in Afghanistan). Arguing that government spending is mostly good because it gets money into people's hands is just the broken window fallacy at work - that cash could have been used for more productive investments in the private sector. Thirdly, I wouldn't trust the ROI figures published by a government agency, especially since the US government has a 'use it or lose it' approach to budget allocation. They have every motivation to just make up figures to channel more cash their way.

mitchitized 3y ago

> I'm gonna get crucified for saying this, but what do invasions of Iraq, or occupations of Afghanistan for 20 years actually really achieve? I'm going to answer with another question. For the past thirty years, how many countries have traded crude oil in currencies OTHER than the dollar, and of those countries, which ones have NOT been invaded by the United States? Petrodollar explained: https://www.wallstreetmojo.com/petrodollar/ https://www.wallstreetmojo.com/petrodollar/ This doesn't really have anything to do with NASA budget but deserves a lot more scrutiny than it gets, IMHO.