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Economic Nonsense From AARP

In a letter in today’s Press, the communications director for the New Jersey AARP states:


We all know that Social Security helps families, but we rarely stop to think how much it helps the larger economy. In fact, it helps tremendously. Social Security fuels almost $1.4 trillion in economic activity nationally — $41.3 billion in our own state of New Jersey, according to a new study by AARP’s Public Policy Institute.

Overall, each dollar in Social Security benefits generates about $2 in spending, as consumers spend the money and businesses then spend it again. In New Jersey, this spending supports 256,000 jobs, a valuable contribution that gets little notice.

AARP’s study provides one more reason we need to have a serious national conversation about the future of Social Security. It shows that decisions made in Washington to address Social Security’s finances would have a profound impact that goes far beyond the families that get benefits.


So if we just take a bunch of money from people and give it to other people to spend, that makes us all richer?  What about the people who had it in the first place?  Weren’t they going to spend it?  Even if the government didn’t get the money from taxes, and printed it instead, just printing a bunch of paper and handing it out to people doesn’t give us any more stuff.  It simply increases the amount of paper chasing after the same stuff, which results in price inflation.

Look.  Let’s say I sell you a pair of socks for $1.  Tomorrow you sell them back to me for $1.  The next day I sell them back to you, etc, etc.  At the end of one month, the government would say we generated $30 in economic activity!  So what?  We still only have one pair of socks.  Only productive economic activity makes us wealthier.

We’re rich!


Or consider the case of Thurston Howell III.  He’s a millionaire, but he doesn’t live any better than the hapless and probably penniless Gilligan.  His money is useless because nothing is being produced for him to buy.  Howell could have trillions, it would make no difference in his life.  This is why the we all feel like we’re getting poorer even though the government claims we’re in a recovery.ThurstonHowellIII

His millions are useless.


Living like a millionaire?



By the way, I’ve just heard on the radio another Democrat say that we need to raise the debt ceiling because “America always pays it’s bills.”  What a bunch of hogwash.  Raising the debt ceiling is how we avoid paying our bills.  If we paid our bills we wouldn’t borrow more money, we would just pay our bills.

Suppose every month you spent more than you made and charged the difference.  The way to pay your bills would be to then spend less than you make and use the difference to pay off your credit card.  Nobody but Obama and the Democrats would say that taking out a second credit card to make payments on the first credit card is being responsible and paying your bills.  But this is the nonsense that is being fed to us.


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