Increases and decreases in the economy supply must match increases and falls in the value of goods and services, approximately; otherwise, the relative value of money changes. ‘The speculators will become steady with that.
We also should gather that all economy supply is circulated and used to produce something of value to someone. The rich buy more expensive things
Become dependent to market more and invest less. The poor buy less expensive things and invest less. In fact, there are heaps of goods and services from which the rich and poor can satisfy themselves. There are dozens of different investments from Which the rich and poor can choose. The progressive economy does not sit unused. It always spreads to produce valuable goods and services.
How will we break the visitor economy? Leave out for the modest inventory of economy we must hold it to invest and spend.The economic system doesn’t sit close to doing nothing or simply pass around from one rich person to another,
again doing nothing productive. Most of it is used to create additional money. In this way the GDP usually continues to increase.
We should invest more money to companies that use it to buy plant and equipment to produce additional value. In that process, executives, managers and laborers receive good economy to spend and invest. In restitution, we receive interest or dividends on our account that we use to buy goods and services and reinvest. The economic system doesn’t just circulate pointlessly.
The only bad economy that is useless is that which is accumulated up. That gets out on a large scale when people and businesses lose confidence that their money will bring a satisfactory return, i.e., more money, so they stop buying and investing. They just had to take it all back! That can have a recession or depression. The reason not to have depressions any more is that the government can invest money in circulation and make some investments itself and hope that people will gain confidence, use it to spend and invest to keep the economy running. No guarantee that will happen, of course, so impressions are always possible.
Or so other possible problem is created by the imbalance of consumption and investment, but that is another tale. The relationship between tax amounts, tax rates and productivity and “prosperity” is not obvious from a priori reasoning. Increases in per-capita GDP depend on increases in productivity. If we either do not work harder and smarter, or apply all our earnings on consumption, i.e., save and invest nothing, either in machinery, infrastructure, or social services, then productivity and per-capita GDP will not increase. The inquiry then becomes whether we are more productive or save and investing more to obtain increases in productivity. The result is determined by trial and error, i.e., experience, and not by theory.
Some claim, without substantiation, that all economic activity, including defense and justice, would be more productive if performed by non-government workers. Socialist claims that the whole economic activity would be more productive if performed by government workers. Libertarians, without validation, make claims somewhere between these opposite characters.
In the U.S., since its founding, trial and error has resulted in the present mix of government and an economic activity.
Kamala Sarup earned a master’s degree in economics.
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