GOP insiders really that out of touch

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And how do they hoard?

Linda McMahon spent roughly $100 million of her own money trying to win a CT Senate seat in 2012 and 2010--she lost both times--neither race was close.

Runyan - I think the answer to your question is right there in what he said: "The rich spend more, but proportionally less". If I give 200 single men a $50,000/yr income (that's $10 million total), you can bet most of them are going to spend most of their $50,000 every year and save a relatively small amount of it. i.e. most of that money is going into the economy. On the other hand if I give one man an income of $10 million a year, chances are he's going to put most of it in the bank, and not into the economy, because he doesn't need to spend it all on his basic living necessities.

This leads to trickle down because of course, instead of saving all that money, the $10/mil a year guy might choose to invest it or start a company and hire some people. But then again, he might not - now there's a lot of money sitting in the bank, not creating jobs and not going into the economy as it would be if it were divided up among more people.

And that leads us to the problem of trickle-down. The entire idea behind trickle-down is flawed because of the order of events that it proposes. FIRST, give the wealthy money (tax breaks, etc.), and then SECOND they will create jobs. The problem is that if you give them the money and they don't create jobs, you're out of luck cause they ain't giving the money back. Under trickle-down, $10/mil a year man gets his tax break no matter what he does with the money. Reverse it (this is what I like to call "lets give them the same deal they propose to give us and see if they still like it"), such that they get tax breaks after the jobs are created, and suddenly they don't like that idea - even though if they had any confidence (or intentions) of creating the jobs, it should matter very little because they'd still get their tax breaks if jobs actually were created.

Of course, the poor and the middle class are not, for the most part, directly creating jobs either - after all, most such people do not hire other people. But they do spend money and put money into the economy, which ultimately leads businesses to do more volume and make more profits, and they hire more people with those profits to help handle the increased volume. Wash, rinse, and repeat.

One cannot raise sea level by lifting up a buoy, but you can raise all buoys if you raise sea level. We rise and fall together. We sink and swim together.

Thank you ScrewyWabbit, that's exactly what I was getting at.

*Ahem*. You might want to read up on economics. Do you think that the money simply *sits* there in the bank? Ever heard of capital markets?

The capital market is pretty much what lead to America's current economic problems, isn't it?

*sigh*. Has it ever occurred to you that economics has a broader scope than just the latest boom/bust?

Thank Satan I am a Anarchist.

Has it ever occurred to you that human nature all but forces history to repeat itself?

Insanity is doing the same thing multiple times and expecting different results, dude. Try the same thing that failed before, and it will fail again. It's just a matter of time.

Well, I advocate doing the same thing again and again (capitalism) and expecting the same results: Economic growth. And guess what, I'm right.

Banks tend to invest these things in Wall Street. And I don't mean in stocks. I mean in derivative securities and other obscure financial instruments. These instruments are often "bets" and when their value changes it usually has no corresponding value in the economy itself. I.e. if the price of a future or an option goes up its based on what people will think will happen, rather than any real world wealth having been created i.e. no goods or services have been delivered or manufactured or produced. So money sitting in the bank gives very little economic benefit in terms of anything tangible.

Sure, a period of growth leading to a crash.

If that's truly what you think is best, I pity you. I really do.

Followed by a recovery. It is called the business cycle.

ruveyn

Beware of ideology subverting evidence.

The real problem is capital markets are global. Chances are a lot of the resulting jobs are being created elsewhere in the world, particularly developing countries that still have a lot of room to grow.

I'm not sure I completely trust those who want to blame the current economic predicament purely on what happened with the financial sector. The thing people don't realize with bubbles is that everyone benefits during the artificial "high" stage. Inflated asset prices create a false illusion of wealth that acts like an endogenous Keynesian stimulus. It gave people a lot of artificial equity money to spend. Artificial equity is the path of least resistance to compensate for the lack of real wage growth. The lack of real wage growth is the deeper problem IMO.

Ah, but wage growth is evil because it costs companies money and therefore they won't create as many jobs!