The Keneysian Multiplier was first developed by Richard F. Kahn in 1931 near the depression. Exogenous increases in spending by a multiple of that increase. Or saying a government could stimulate a great deal of new production with a modest outlaying. Only if the people who recieve this money then spend most on consumtion goods. Food clothes pictures etc.
I first of all agree with the basic principles behind Keynesian theory. But I think it could be modified to streamline money from the treasury. Maybe a clause that says it must be spent specifically on certain goods. If you tracked every stimulus check we would learn a lot must of been wasted.
The theory continues that the people who recieve this money then spend most on consumption goods and save the rest. The extra spending allows businesses to hire
more people and pay them . Which in turn allows a further increase in consumer spending at each step. At each step of the muliplier the increase in spending is smaller than in the first previous step. So that the multiplier process tapers off and allows the attainment of an equlibrium. Importing and tax payments are the variables in this equation.
I agree with this theory in many aspects because money without purpose is useless.
But my idea is that we could possibly make a stipulation that says a stimulus
check must be spent on 50% consumer goods and 50% capitol goods. The service sector employs 80% of Americans alone and includes all consumer products. Capitol goods are factory machinery, tools, equipment and other products which are used to produce other products for consumption. Used to produce other goods or services. They are key to developing a positive return from manufactors. Manufactoring companies use capitol goods to make funtional goods to sell individual services. As a result capitol goods are sometimes referred to as producers of goods or means of production.
Also this clause would say 50% must be spent on consumer goods. Food, clothing, whatever is consumed, by consumers. The theory is designed to bring equilibrium but if money is not spent in either of these areas what good is distributing large sums
of money. My theory is if we created a Voucher program or card for future stimulus that guaranteed each payment is spent on ONLY these areas we could see a difference.
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