[kerouac]

What do you guys think about a plan that would give $30,000 to every US citizen over the age of 18 in order to revive the economy?

It would be a great aid to Americans who have ideas and want to get them implemented.

It could come as a $30k 0% interest loan to whoever is interested. No catch. People can spend it on drugs if they want, or on trips around the world. The most important thing about it is that it will help the entrepreneurs, and people who need the money the most, to get things moving again.

Instead of tax breaks, maybe we should be giving out interest free loans?

[MiXX]

(12-20-2011 05:53 PM)kerouac Wrote:  

Instead of tax breaks, maybe we should be giving out interest free loans?

And all hot American women would stop giving all men any bitch shields or LMR for 6 months!

Mixx

[Caligula]

It would just cause rampant inflation.

[Gmac]

Most people aren't financially responsible as it is, giving $30k away to everyone would be a huge mistake.

[speakeasy]

And where would the money come from? Borrowed from China? Or ramp up the printing press? Either way I don't see that doing anymore than giving a temporary boost to the economy. That's like giving a junkie one last hit rather than treating the real cause of his addiction.

[kerouac]

It wouldn't be any different from the way things work already in the sense of how government (or the fed) prints money, loans it to a bank (in this case a government created bank solely for this cause), and the bank would loan it to the citizen. It would be up to the individual to see how to make use of that debt.

The individual could either go on a spending spree, or could use that money to produce. In any case, what would happen is that there would be economic activity. There would of course be a certain percentage that would use the money frivolously, but there would be a lot of people who would use the money for some good.

It would not be that much different than a tax break, except it would be a lot more pro-active, and would help those who have ideas, or ambitions, but are held back by financial hardships. Its effects on inflation would be negligible (we're only talking 30k per person here. if someone wants to spend that will only get them lower-priced goods or services, and 30k can only last so long...).

[ElJefe]

edit

[Chad Daring]

It would have to come with some kind of process of determination. Do it like a scholarship. You have to apply and put in writing why you should recieve it and what you will do with it. You'd then have to sign and affidavit (might be using the wrong term there) stating that you'll only do with the money what you stated, if not we get to cut your head off.

I think if the RIGHT people were given money like that it could definitely stimulate the economy. If good honest but struggling people who want to buy a home and/or car got it. Or entrepreneurs that want to open a small business and then employ people and put money back into the system got it. Or if smart but poor families that want to send their child to college got it. Those are the kinds of situations that would lead to a better America. Problem is thats maybe 20% of the population.


As for where it would come from, maybe I"m wrong, but couldn't be just take the state lotteries? Rather then give 60 million dollars to some stupid hick in a trailer why not dissolve them amongst the deserving members of society and create better communities.

[ElJefe]

Ahh... the wonders of economic (be it personal, micro or macro) illiteracy.

300 million people multiplied by USD 30K is... 9 trillion USD.

About 60% of GDP.

Where would that money come from? My friend, if the US government could do that, it would already have done so. What do you think Obama's stimulus was about - except it was not as simple as your idea, the principle was the same. And it completely failed to achieve what it set out to do. Ask yourself why?

Why did good, old-fashioned Keynesian principles of government stimulating demand fail to get this economy running again?

Here are my answers:

1. The aggregate national debt was already very high. Expectations till now had been that growth in production would outpace growth in debt. Reality caught up with everyone.
2. All economic growth the past decade has been artificial and based on higher borrowing and lower savings ratios as opposed to productivity growth
3. Government regulation and special interest groups have made legislation so cumbersome the loss inflicted on business efficiency could be measured in hundreds of billions of dollars.

Do I have any empirical data to back these casualities up? Nope.

In any case, one of the PhDs at my bank (where I work) was talking about how the current crises is mostly one for the lower classes. Well-educated Americans are actually coming out OK.

If true... if the problem IS mostly with the lower classes, then the problem is immigration of low-skilled labor from 3rd world countries. They are willing to work the fields in San Bernadino for $8 an hour in blazing heat while the single, fat Mom sits in her decaying house in Detroit waiting for the government to save her from the dumb decisions she made.

The reason for our current crisis is not the economy. If it was just that, the problem would've solved itself already. The economic crisis is part of a larger, more dire structural crisis afflicting the entire Western world - voters and politicians alike, bankers and special interest groups. Everyone. This entire forum is a testament to it. How many men on this forum are going to become model citizens, stay put, have a stable career and income, pay their taxes and raise three children? That's right. 0. Instead, we're all trying to get off the sinking ship - we've seen it coming a long time.

And when more and more men realize this, the ship is going to sink even faster. Progressive, the New Left, Feminism... they've already killed the goose that lays the golden egg.

The current crisis just a symptom of a more sinister disease that has permeated all aspects of society. It's what made the grotesque and irresponsible greed of the sub-prime crisis possible, the wanton government spending and massive deficits, the outrageuous entitlement culture that makes Americans say "gimme, gimme, gimme" or "what's in it for me" every time a politician opens his mouth. It's the problem that lets second-rate dictators, who are nothing compared to the tyrants we used to face up to, push us around when we could have deposed and defeated all of within 3 years of 9/11. Had we spent $2 trillion on a 2y-war instead of $200 bn a year on a 10y war, the world would've been safer, respect for the US would've been greater, and our pride in it's proper place. And maybe the younger generation, brain-washed by the verbal vomit spewed by the progressives, neo-cons and the New Left, would've realized that America still was master of its own fate and we wouldn't be seeing crowds of whiny bitches yapping Occupy Wall St and demanding others yield the fruits of their labor, while they ought to be creating value themselves, staying with their parents, saving every penny to get ahead.

The damage done already has been immense. Government debt at 100% of GDP and unemployment at 9% to show for it. The last time the debt was that high, we had built 300,000 warplanes, 100,000 tanks, more than 100 aircraft carriers and millions and millions of shipping tonnage. 11 million Americans out of 140 million were in uniform, and more than 200 million enemy citizens were on the verge of being conquered. We were by far the most superior military power in the world - not only ourselves, we had supplied the USSR and the UK both their war material. And in just 3½ years.

Compare that with the achievements of today?

As Roissy has already described: the solution is less government in the private sphere. A restoration of civil society, military prominence, and personal responsibility at all levels of society: fiscal responsibility in government, personal responsibility for kith and kin in the households. Taxes that do not adversely affect productivity levels of individuals, and that encourage firms to base their operations in the US. Less faith in the good will of our enemies and more faith in the power of persuasion of large carrier battle groups and tank divisions against which the rabble our enemies often constitute have no chance, nor our adversaries to be: namely China and her minions (Iran/Syria/Russia... Venezuela?).

People can often solve their problems, and the solutions they manage to find are usually better than those government could hope to offer (one-size fits all, by its very nature). In the realm of defence, the most important task of government, we should expect that as a free nation, wanting to remain so well into the 21st century as well, we must maintain at all times military supremacy over our adversaries.

It's a simple formula to prescribe... but completely anathema to the establishment, elites and intellectuals of Western society. There is no easier way to describe the nature of our crisis than their hostility to these very simple ideas I have put forth. No wonder we are at the mercy of Chinese to bankroll our irresponsibility, or the Taliban to accept a peace deal now when they could do better by waiting till tomorrow.

I can only hope that at least one Western enclave will break away from the rest before it's too late.

[TudoBem]

Why not just make the minimum wage $100/hr? Then everyone would be rich and able to own multiple homes and drive new cars.

To better explain why your plan is bad, you need to remove the idea from your mind that numbers and zeros mean anything. They are just placeholders for the physical consumption of goods and services. Our imaginary symbols readjust themselves to reflect reality, not the other way around.

[Gmac]

I don't know if you grasp the fundamentals of real economics or human psychology Tudo... all of those ideas are disastrous and wouldn't work as intended.

[jmoney29]

Did anyone see the Chappelles Show' where Black people were given reparations? I imagine something similar happening. If we don't educate people about their past spending habits(credit,cars, school,housing), then we are just reinforcing their bad choices with good money.

Reparations 2003

[kerouac]

I guess what I was hoping to get out of this "thought experiment" was to hear some of the guys on this forum to get outside of the political box and think about how people like them, and not all of the delinquents we are quick to focus on, would be able to make use of an extra $30k in their bank accounts.

For a rich guy who makes over $500k/yr, 30k won't bring around much of a change, but to someone who only makes $30k/year, that would be 1+ year's worth of time and money in order to get projects done.

So, in other words, would a "free" $30k allow you to drastically change your life? If not 30k, then how much, and how/why?

[Gmac]

Well, the thread title is named "giving 30k to everyone"... so of course we'd instinctively go to the majority of the population... who are generally terrible with money.

As for me, 2/3 of it would go towards paying off my student loans and credit debt. I'd probably take a small vacation for $2-3k, put away $5k in the bank and invest the remainder in my business ventures.

[TudoBem]

(12-20-2011 08:54 PM)Gmac Wrote:  

I don't know if you grasp the fundamentals of real economics or human psychology Tudo... all of those ideas are disastrous and wouldn't work as intended.

I think you need to reread my post and check for sarcasm.

[Samseau]

The inflation from 30K would be so fucking crazy gas would shoot up to $7 or more. Prices would rise everywhere within a week.

I would spend all 30K on gold and silver and just make 3x on the return.

[jariel]

I know who the 30K would not be given to.

[kerouac]

I don't see how you guys all jump to the conclusion that a one-time pump of $30k into a bunch of people's bank accounts is going to produce long term inflation!

How come this 30k will cause inflation but tax breaks to the upper classes don't?

Do you guys take a moment to imagine how insignificant $30k can be to people's spending habits, whereas it could be of great use to a budding entrepreneurs business?

My point is that for a lot of people with ideas out there to have some initial cash to work with in order to bring the entry-level parts of their ideas to fruition. It would also be great for some people who are stuck in high-interest bearing debt who can only afford to pay the interest of their debt, to get out of (high-interest) debt!

Of course that 30k (multiplied by the millions of people who would go for it) would cost a lot in terms of government spending, but you would have to think about it as a loan that would find its way back to the government coffers (and cease to exist just as easily as it emerged). If you want to get into the practicalities of it, there could also be a higher interest rate (like 2-5%) or the rate of short-term t-bills. For a lot of people who don't have access to easy loans (ie. rich family members or friends), wouldn't this be godsend?

[Jalouse]

(12-21-2011 01:59 PM)kerouac Wrote:  

I don't see how you guys all jump to the conclusion that a one-time pump of $30k into a bunch of people's bank accounts is going to produce long term inflation!

How come this 30k will cause inflation but tax breaks to the upper classes don't?

Do you guys take a moment to imagine how insignificant $30k can be to people's spending habits, whereas it could be of great use to a budding entrepreneurs business?

My point is that for a lot of people with ideas out there to have some initial cash to work with in order to bring the entry-level parts of their ideas to fruition. It would also be great for some people who are stuck in high-interest bearing debt who can only afford to pay the interest of their debt, to get out of (high-interest) debt!

Of course that 30k (multiplied by the millions of people who would go for it) would cost a lot in terms of government spending, but you would have to think about it as a loan that would find its way back to the government coffers (and cease to exist just as easily as it emerged). If you want to get into the practicalities of it, there could also be a higher interest rate (like 2-5%) or the rate of short-term t-bills. For a lot of people who don't have access to easy loans (ie. rich family members or friends), wouldn't this be godsend?

The thing is that it's just a complete scattergun approach, for most of the people who are in a decent situation they wouldn't do much with it. If you gave me 30k cash today as an interest free loan I'd just invest it in something low risk and as it's interest free I'd never pay it back unless there is some kind of stipulation that forces me to do it, I certainly wouldn't go out and buy a load of crap I don't need, it is a loan after all.

Then for the people who are struggling and don't have much money it's more than likely that they'll just blow it either on junk they don't need or some ill advised investment. Could you imagine the number of schemes that would pop up targeting these people to screw them out of their 30 thousand?

This would then more than likely result in a huge portion of this money being redistributed to smart wealthy people who would chase after this money and a tonne of people sitting on a $30,000 debt.

[johnwu]

(12-20-2011 06:03 PM)Caligula Wrote:  

It would just cause rampant inflation.

Never mind the excess 1.6 trillion reserves held at the Fed.....

[MikeCF]

The self-class hate is great.

You broke guys are all against giving people like you $30,000.

Meanwhile, Wall Street got around 30 trillion.

Keeping hating on people like yourselves, because, hey it's worked out well so far, right?

[Samseau]

A small breakdown on how inflation works:

(Money Velocity X Money Supply) / Supply of Real Values = Total Inflation


The reason we don't have crazy inflation right now, despite printing trillions, is that the money velocity is at all time lows. The rich banks get the money from the FED, horde it, and they get to spend it as they please while everyone else suffers and rots. However, the money supply is still increased relative to the total supply of real values (i.e. economic goods like oil, technology, etc.), so over enough time the value of money falls and prices will increase to reflect diminished purchasing power.

In the long run, I see hyperinflation because it will take more and more money printing to get the same returns. First they print a few trillion in 2010, then 4-5 trillion in 2013, then 10-15 trillion in 2016, etc. etc. That is why our national debt also looks like this:



I choose the above graph because it shows how money printing and debt work: in order to get the same return on the decreasing value of the currency being printed, more of it must be printed. That is why our debt is also growing exponentially.

So, back to your original question:

Quote:

I don't see how you guys all jump to the conclusion that a one-time pump of $30k into a bunch of people's bank accounts is going to produce long term inflation!

How come this 30k will cause inflation but tax breaks to the upper classes don't?

If you gave 30K to everyone, people would just spend it immediately which would be INSANE money velocity, causing massive immediate inflation.

[kerouac]

(12-21-2011 03:28 PM)Jalouse Wrote:  

This would then more than likely result in a huge portion of this money being redistributed to smart wealthy people who would chase after this money and a tonne of people sitting on a $30,000 debt.

That is definitely a down-side. Also one reason why higher-education costs what it does today.

I think we've come to the conclusion that there have to be certain conditions. What should they be?

How do you guys think government can make an effective program that would help budding entrepreneurs? Do you think the current program run through the SBA is good enough? Should the government just stay out of it?

I personally believe (good) government can play a pro-active role in getting the ball rolling for a lot of people.

[ElJefe]

If everyone used the money to bring down their private debt, that'd be good, though. With their private debt out of the way, banks would be in better shape and better able to lend, and private individuals could increase their consumption without worrying about pressing financial obligations.

But I doubt that will happen.

Characteristic of nearly all welfare-state economies (Western) is the tax deductions both individuals and firms can receive for borrowing. The entire economy is geared to reward those who borrow and waste, while punishing those who are productive and save.

If you gave everyone 30K, in the best instance, all you'd be doing is moving debt from the private to the public sector. Yet society as a whole still needs to pay back this debt over time. Unless you have a healthy market economy, you will not generate enough growth to give you a chance to pay this debt back. If you simply print the money, all you do is create inflation, capital flight and you destroy everybody's 401K.

Instead of giving people 30K, remove tax-deductions for borrowing. All borrowing. Enact an amendment that makes government debt illegal except when the nation is in a state of war (which only Congress can declare). Enforce the amendment by punishing, financially or otherwise, legislators when they fail to legislate balanced budgets.

The only instance where you could get everyone 30K and not have to deal with inflation or future debt is by... you guessed it! PLUNDER! SPOILS OF WAR, MAN!

Yes... if we want 9 trillion dollars, we should nuke the Middle East (only to the extent that we don't destroy the climate) then take over their energy reserves, placating Russia in the process. We should leave Mecca and a few other cities standing as hostages in case they try to come back at us with their own nuke.

The middle east has over 200 bn barrels of oil reserves. At a net-present value of USD 50 a barrel, that's 10 trillion dollars.

This is the best way to bring Kerouacs idea to fruition. Horribly unchristian... but... it could work.

[Baldwin81]

A rough calculation - discounting the time and manpower required to authorize and print the 30K for each American - would be 290,000,000 people (excluding those under 18) x $30,000 = $8,700,000,000,000.00.

Eight-point-seven trillion dollars is roughly half of our national debt (15 trillion dollars). It probably goes without saying that China would not lend us this much money - our only option would be to print the money ourselves. If we printed that much money the dollar would lose more value, more quickly, than anyone's ever seen. The plan injects money into our financial system and encourages spending, but it's illogical to think that spending and debt are a cure to a spending and debt problem. We're encouraging citizens to spend and go into debt when the way out of this is to save and produce. Of course, this won't happen because we manufacture nothing and save nothing.

Stimulus programs are the equivalent of having a bad day, going home, snorting an gram of coke and feeling fantastic for a little while...

Upon waking the next morning (afternoon), however, you feel worse than you did before and nothing really changes. So, the next night, you go out and snort an 8-ball and the same process repeats itself.

With every new stimulus we ensure that the eventual economic crash will be even worse. Still, part of me thinks Kerouac's plan would be fantastic because we could print half of our national debt in one go, live like kings for minute or two (or, if you're smart take your 30k, exchange it to a different currency, and run like hell), and then let the whole thing implode and start from scratch. At this point we're probably better off...