The velocity of money returns to normal after it is spent into the private sector again. It’s just one hop for how it is spent. In the meantime the taxed money may be held in some funds, and those funds may be invested in private banks. We really don’t know. The Grace Commission found that hardly anything from personal income taxes even reaches public works. There is hardly any difference if the government burned all your tax money with their left hand (fiscal policy) and printed shiny new money with their right hand (monetary policy).
My point is that the money keeps circulating. Isn’t it short sighted the other way, to act as if it disappeared?
Circulating among rich or poor is a different question - of outsorcing, automation, demand for human labor and services, UBI and so on - rather than spending it on the armed forces. Poor people get paid in the armed forces and go spend that money into the economy too. It’s apples and oranges. I’m saying the tragedy is the bombing and destruction, the money found its way back into the economy.
I don't think the velocity of money returns to normal. Money used to buy a single Ferrari probably circulates less than money used to buy million gallons of milk. This should imply that for higher gdp we must tax the rich and spend on poor.
American defense spending spends lesser on the poor, and the country does not even get bridges or trains in return.
Look, if you traced the money paid to defense contractors vs to the poor you may find that its velocity is the same after a month. Show me that it’s definitely not true. It seems quite plausible.
My point is that the money keeps circulating. Isn’t it short sighted the other way, to act as if it disappeared?
Circulating among rich or poor is a different question - of outsorcing, automation, demand for human labor and services, UBI and so on - rather than spending it on the armed forces. Poor people get paid in the armed forces and go spend that money into the economy too. It’s apples and oranges. I’m saying the tragedy is the bombing and destruction, the money found its way back into the economy.