Guest Post by starfcker
Tired of listening to all the paid for economist shills such as Hilsenrath, Krugman, Zandi, pretending to not understand why our economy doesn’t take off? They understand. The function of our economy is a simple thing. And if you have been confused by their attempts to confuse you, this should simplify your understanding of how our economy worked, when it was working. I’ll give it two quick stories, and class will be over.
First, a real life example. I had a cash sale one day. quite rare for a wholesale business. The gentleman paid for his purchase with three 100 dollar bills. I immediately took the money and paid a man that I owed. The next morning, that guy went to another friend of mine’s business, and spent the same three hundred dollar bills. That friend went and paid his property taxes that afternoon in cash, including those same three hundred dollar bills. in less than 24 hours, that $300 had skipped through four sets of hands before ending up in the tax assessor’s office.
If you ever hear terms like velocity of money, and multiplier effect, this is what those terms mean. That $300 got spent 4 times in 24 hours, so it actually counted as $1200 in business activity, GDP, whatever you want to call it. So the multiplier was x 4, in a mere 24 hours. Let’s just call it a week, multiply that $1200. x 52. Even weekly, at that rate, those measly three 100 dollar bills could multiply to over $62,000. a year. And everybody got their piece of that pie through effort, by getting out there and chasing it, no redistribution necessary. And that’s just one example, and a tiny example at that.
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