Valerie Jarrett: Unemployment checks are good for the economy

White House senior adviser Valerie Jarrett: "People who receive that unemployment check go out and spend it and help stimulate the economy, so that's healthy as well."
One general point: where is this money coming from? If it is having to come from someplace else, where is there a net increase in spending?

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Anonymous Anonymous said...

It's a transfer of money from the more wealthy to the less wealthy. As such, the money transferred is more likely to be used for basic goods / services and less likely to be used for savings. Hence the stimulative effect. Of course, the transmission process (government) takes a lot of the money so it's not an efficient transfer.

2/23/2012 12:28 PM  
Blogger John Lott said...

Dear David:
There is no stimulative impact from this transfer. Everyone spends the money that they get. If a "wealthy" person leaves his money in the bank, the bank buys bonds or lends it out in some other way. The money doesn't sit in a hole in his yard.

2/24/2012 9:41 AM  

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