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It sounds like you're assuming inflation. But this money won't be printed out of thin air, it will come from taxes and thus aggregate demand won't change. (No
by tocomment 13y ago
It sounds like you're assuming inflation. But this money won't be printed out of thin air, it will come from taxes and thus aggregate demand won't change. (Not sure if you were clear on that.)
- return0 13y agoGovernment is supposed to collect taxes and spend them to benefit the community as a whole. Free subsidies seem to reinforce individual consumerism, which in the end does not benefit the people.
- lmm 13y agoIt improves the economy (because the velocity of money is higher in the hands of consumers) and thereby benefits the people. The system as a whole is a form of progressive taxation, and so benefits people on average (because the marginal value of money is higher for the poor).