Monday, February 9, 2009

More Fiscal Idiocy

On WNYC this AM more foolish talk about how tax cuts get saved and therefore aren't properly stimulative. I get a tax cut that I spend. But the store I spend it in breaks up my disbursement and pays fractions out to suppliers and employees, and these may well put it in their banks, 401 (k) plans etc. This economy depends on bang for the buck: dollars moving from one point of transaction to the next, again and again. The old multiplier. But eventually, EVERY DOLLAR SPENT WILL BE SOMEWHERE SAVED! Right now, the money's grinding to a halt in the banks. There's the problem.

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