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kentuck Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-26-10 12:41 PM
Original message
Is it true?
Edited on Tue Jan-26-10 12:42 PM by kentuck
.

That every dollar of government spending is worth seven dollars in the overall economy? If so, then would not more food stamps be more beneficial than a spending freeze to get our economy going again?

Of course, spending on a missile to put in the ground would be worth less to the overall economy than spending on a social program where the recipient would spend every penny he gets. For example, if a dollar is spent buying a product at the grocery store, then that helps to pay the producer of the product, the transportation, the stockers, the clerks, the packagers, etc. Everybody profits from that one dollar.

But what is the benefit of a "freeze". Other than for political reasons, it would have no positive impact on the economy, except perhaps it would give more confidence to those concerned about deficit spending? More food stamps for everyone!
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FBaggins Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-26-10 12:46 PM
Response to Original message
1. No.
I suspect that this is a confused combination of arguments for deficit spending and fractional reserve lending.

Of course, spending on a missile to put in the ground would be worth less to the overall economy than spending on a social program where the recipient would spend every penny he gets.

The guy you buy the missile from doesn't spend it?

But what is the benefit of a "freeze". Other than for political reasons

That's pretty much it. Political benefit. No real benefit (something candidate Obama once understood.
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Democrats_win Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-26-10 12:49 PM
Response to Original message
2. Targeted spending is most beneficial. It can create positive economic benefits.
For instance investing in railroads during the 1800s got our country moving. Today, Defense spending, it can be argued, is drastically harming our economy. "Defense" has created more instability in the Middle East, causing higher oil prices which directly harms our economy. If that money had been spent on developing more hybrid cars, America would be MUCH better off. Simply put, our leaders are idiots.
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jtrockville Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-26-10 02:45 PM
Response to Original message
3. Yes, food stamps (and unemployment benefits) stimulate quickly.
Edited on Tue Jan-26-10 02:45 PM by jtrockville
Here's a good read on the topic: http://frac.org/news/econstimulus2.htm

I wouldn't think it's a good long-term strategy though. But it'd be a quick shot-in-the-arm to get us through a recession.
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