[AR] Re: OT economy booster
- From: Edward Wright <edward.v.wright@xxxxxxxxx>
- To: arocket@xxxxxxxxxxxxx
- Date: Wed, 30 Dec 2015 11:38:33 -0600
All borrowed money spent stimulates the economy in the short run.
That is a common fallacy which economists discredited long ago.
You overlook the fact that money has to come from somewhere. If you borrow it,
someone else can't. That may stimulate you, but at a cost to someone else.
There's no net stimulus unless you are more productive than that someone else.
Read Von Mises.
Apollo can be considered as a war on the moon- it stimulated the economy;
there were spin-offs as well, but the main direct outcome from that was a
bunch of mostly useless junk lying underwater.
Building useless junk and sinking it underwater does not make you richer. You
can prove that experimentally, on a personal level. Just wreck your car, then
drive it into the river. Does that stimulate your household economy?
Building useless junk makes you poorer because you waste resources that could
have been used for building something useful.
Any time anyone is borrowing money to do something, that stimulates the
economy, the money goes into wages, and that goes into spending on goods, and
that ripples out through the economy and the economy increases;
That is called the "Keynesian multiplier effect." Economists discredited
decades ago. Again, read Von Mises.
If the same dollar bill passes through the hands of 7 people, that is $7 worth
of "economic activity" according to Keynes. That's where the "every dollar
spent on NASA returns $7" bit comes from. But that is not a real economic
return, it's just a bookkeeping trick. If you and I trade the same dollar back
and forth 7 times, but never produce anything of value, we've generated $7
worth of acitivity according to Keynes. But, in fact, we've produced nothing.
What you're arguing for is the economic equivalent of a perpetual-motion
machine.
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