5 September 2012
“If someone who is literally living paycheck to paycheck gets an extra dollar, it’s very likely that they will spend that dollar immediately on whatever they need – groceries, to pay the telephone bill, to pay the electric bill. Tracking that single dollar spent through the economic chain shows what economists call the ripple effect. For example, that dollar (in foodstamps) spent at the grocery store in turn helps to pay the salaries of the grocery clerks, pays the truckers who haul the food and produce cross-country, and finally goes to the farmer who grows the crops. The report pointed to expanding unemployment benefits as the program that gets the next biggest bang for the buck. That’s because, although the unemployed are already getting checks, they need to spend the money. For every dollar spent here, the economy would see a return of $1.64” Mark Zandi
While no one doubts that foodstamps are essential to ensure survival of the poorest segment of society, to be told by economists that the economy at large profits by this is taking national finance into the realms of the bizarre. if every dollar paid out in foodstamps stimulates the economy to the tune of $1.64, why isn’t everyone receiving foodstamps?
It should come as no surprise that Mark Zandi is an economist, but what is really scary is that he works for Moodys, one of the financial oracles of the world of economics.