9 ms·

Yes and no. Give someone earning $7.50/hour more money and it gets spent and put back into the economy like you said. Give someone earning a base salary of say

Yes and no. Give someone earning $7.50/hour more money and it gets spent and put back into the economy like you said. Give someone earning a base salary of say 500k more money and it gets put into a bank to earn them even more money, taking it out of the equation.

adrianN 7y ago
I don't support trickle down economics, but it's not the case that money in banks is just sitting around in a vault. The banks actually do stuff with the money. For example it's loaned out to real world businesses.
- mschuster91 7y ago
  > The banks actually do stuff with the money. For example it's loaned out to real world businesses. Traditional loan business is not the core business of banks any more, at least not where the big profits come from.
- neffy 7y ago
  No it's not - banks are statistical multiplexers. They don't take money and lend it out. They create money, lend that, and then remove that money as the capital (loan amount) is repaid - or when the loan goes into default.
C1sc0cat 7y ago
Hypothetically here you would invest the 500k which is putting money into the economy. Your right that socially its better for society for a lower paid person to have the $ how ever certainly in the UK some of that increase would get clawed back by reduction in benefits.
- ForHackernews 7y ago
  How does buying $500k worth of stock ("investing the money") stimulate the economy? Haven't I just purchased a paper asset from the seller? I guess you could argue that the seller who liquidated their position is now free to spend that cash on something productive.
  - formercoder 7y ago
    That’s the argument for buybacks and dividends. If companies don’t have any NPV positive projects to take then the cash must go out to shareholders who do.
  - C1sc0cat 7y ago
    Aside from the fact that companies need investors there is also the question of investing in IPO's etc.
- skohan 7y ago
  As far as investments, I'm no economist, but I'm skeptical that the money spent purchasing securities has an equal impact as someone buying goods and services locally. It seems like a disproportionate amount would go right back to other members of the investor class, who are going to use it on other securities, or else high-margin luxury items, and very little of that is actually going to escape that bubble. I think you could argue that replacing benefits with direct income is still a "win" for society. If they're able, it's more efficient for people to meet their own needs than to be provided for through a bureaucratic process with lots of administrative overhead.
slv77 7y ago
Some ideas for the US investor. Invest the money with a payday lender to loan it out to your under-paid employees so you can grab even more of their paycheck! Buy a block of housing that houses your under-paid employees and raise rents so you can get even more of their paycheck! Invest in sub-prime auto loans so that your underpaid employees can get to work. Make money on them while the commute! Of course make sure that you diversify if you need to lay them off! Invest is short term unsecured credit card debt of your under-paid employees. To goose the returns put them on a high deductible health plan and leverage what you lend to them with their own health account savings (free money). If you are generous give them a 401K match (which is required by law if you have the same) and leverage up using that money too! Many of your underpaid employees will be on food stamps and located in areas without those fancy suburban grocery stores. Invest a quicky-mart and rake in the food stamp money at high margins! Don’t forget the liquor and lotto tickets as income boosters! If you underpaid employees can’t numb at least you can sell them a bit of hope! Lastly have you thought about the medical field? A lot of your under paid employees are on Medicaid and I’m hearing good things about insulin!
- kthejoker2 7y ago
  The return of the company store ...
  - acct1771 7y ago
    ...return? Walmart, Amazon.
erfgh 7y ago
Nobody puts that money in a bank. They invest it in a mutual fund or similar, so it ends up funding businesses and their employees.
- Droobfest 7y ago
  Investing in a mutual fund only directly funds other shareholders

adrianN 7y ago

I don't support trickle down economics, but it's not the case that money in banks is just sitting around in a vault. The banks actually do stuff with the money. For example it's loaned out to real world businesses.

mschuster91 7y ago
> The banks actually do stuff with the money. For example it's loaned out to real world businesses. Traditional loan business is not the core business of banks any more, at least not where the big profits come from.
neffy 7y ago
No it's not - banks are statistical multiplexers. They don't take money and lend it out. They create money, lend that, and then remove that money as the capital (loan amount) is repaid - or when the loan goes into default.

C1sc0cat 7y ago

Hypothetically here you would invest the 500k which is putting money into the economy. Your right that socially its better for society for a lower paid person to have the $ how ever certainly in the UK some of that increase would get clawed back by reduction in benefits.

ForHackernews 7y ago
How does buying $500k worth of stock ("investing the money") stimulate the economy? Haven't I just purchased a paper asset from the seller? I guess you could argue that the seller who liquidated their position is now free to spend that cash on something productive.
- formercoder 7y ago
  That’s the argument for buybacks and dividends. If companies don’t have any NPV positive projects to take then the cash must go out to shareholders who do.
- C1sc0cat 7y ago
  Aside from the fact that companies need investors there is also the question of investing in IPO's etc.
skohan 7y ago
As far as investments, I'm no economist, but I'm skeptical that the money spent purchasing securities has an equal impact as someone buying goods and services locally. It seems like a disproportionate amount would go right back to other members of the investor class, who are going to use it on other securities, or else high-margin luxury items, and very little of that is actually going to escape that bubble. I think you could argue that replacing benefits with direct income is still a "win" for society. If they're able, it's more efficient for people to meet their own needs than to be provided for through a bureaucratic process with lots of administrative overhead.

slv77 7y ago

Some ideas for the US investor. Invest the money with a payday lender to loan it out to your under-paid employees so you can grab even more of their paycheck! Buy a block of housing that houses your under-paid employees and raise rents so you can get even more of their paycheck! Invest in sub-prime auto loans so that your underpaid employees can get to work. Make money on them while the commute! Of course make sure that you diversify if you need to lay them off! Invest is short term unsecured credit card debt of your under-paid employees. To goose the returns put them on a high deductible health plan and leverage what you lend to them with their own health account savings (free money). If you are generous give them a 401K match (which is required by law if you have the same) and leverage up using that money too! Many of your underpaid employees will be on food stamps and located in areas without those fancy suburban grocery stores. Invest a quicky-mart and rake in the food stamp money at high margins! Don’t forget the liquor and lotto tickets as income boosters! If you underpaid employees can’t numb at least you can sell them a bit of hope! Lastly have you thought about the medical field? A lot of your under paid employees are on Medicaid and I’m hearing good things about insulin!

kthejoker2 7y ago
The return of the company store ...
- acct1771 7y ago
  ...return? Walmart, Amazon.

erfgh 7y ago

Nobody puts that money in a bank. They invest it in a mutual fund or similar, so it ends up funding businesses and their employees.

Droobfest 7y ago
Investing in a mutual fund only directly funds other shareholders