Thursday, October 27, 2011

thought no. 75

Republicans act as if the middle class will grow stronger when the economy gets better. I suspect it's the other way around.

Look up the term "velocity" as it applies to money. When the poor and middle class have more money, they will spend almost all of it right away, usually in ways which generate jobs, and those employed folks will also spend most of their money right away.

Wealthy people tend to invest, which while that's a necessary thing, also has little velocity, meaning it passes thru fewer hands in a given amount of time.

See, what's important is not so much how much money there is within a given system, but how many hands it passes through in how short of a time.

A little money in the hands of the masses goes a lot farther than a lot of money tied up in stocks, bonds or bank vaults.

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