Money is Like Blood
It only works when it is flowing
If you want to understand how the economy should work then think about how the human body actually does work. Blood needs to continually flow around for the body to work. Cells and organs need a steady supply of it for them to remain a useful part of the body. If there is a clot then the flow stops and bad things happen.
Likewise, money needs to continually flow around for the economy to work. The more hands that touch a dollar bill, the better. If too much of it gets shoved into an offshore account, or stashed away in stocks, or sent overseas to pay for products that could have been manufactured here then that money is not flowing and bad things happen. The same can be said for local economies. When you buy stuff from local Mom & Pop shops then that money floats around in your community for a while. When you buy stuff from a local Big Box then most of that money goes to corporate headquarters, wherever that is. When you buy stuff online you can kiss it all goodbye with a click of a button.
When money is allowed to flow through the economy it results in a healthier economy.
Trickle Down economics is another way that money is simply sucked out of the economy, rarely, if ever, seen again. With trickle down economics, we have been giving a bigger and bigger chunk of our money to the wealthy and corporations (via many different types of lower taxes, write-offs, loop-holes, etc.) with the idea that they will create jobs. However, there is absolutely zero promise that they will actually use that growing pile of cash to create jobs. In many cases the exact opposite happens – they do things like stash it away, buy back their own stocks so the price goes up (and so do their bonuses), pay out stock dividends, or invest in overseas manufacturing (so they can layoff more workers here), etc. When you hear “trickle down” think of uncle Sam hemorrhaging blood all over the floor.
When money is allowed to flow through the economy it results in a healthier economy. Fun ways that increase money flow include: increased minimum wage, tax breaks for the middle class and below (after tax breaks for the wealthy are rolled back to where they were), and keeping more jobs here at home. More ambitious ways include green energy, rebuilding our infrastructure, and expanding healthcare – all of those create jobs while doing incredibly important stuff. We need to be careful on tax breaks though because one of the best ways to keep money flowing is to give it to the government. No, I am not crazy…
Since this is about the flow of money, we will skip all the stuff about how our government enables the flow of money with laws that minimize cheating, create financial infrastructure, establish business incentives, etc. In addition to all that, the government plays a big role in the actual flow of money throughout the economy via all its employees and the many many projects they either fund or do themselves. Every government employee takes their paycheck dollars and pumps them right back into their local economies – federal employees are located all over the country. Civilian government contractors spend a ton of money on salaries and projects, again dumping money into local economies. Anyone that is paid through the government is both doing things for us and then buying stuff from us – pretty cool.
It should also be mentioned that much of the stuff that our government works on is stuff that we need but that businesses would not waste their time on. This is not ragging on businessmen – there are high-risk, high-expense, low profit, but forward thinking and important activities that business simply cannot pursue and stay in business. On top of all of that, our government buys a ton of stuff and services from big and small companies every single day all across our country – keeping that money flowing.
Lastly, think about what happens when you go to the car dealership and drop some serious cash on a F-350 Super Duty or a Lexus. What does the dealership do with that money? Do they go out back and burn it or shred it – or do they do something else? They…. spend it! They give a good chunk to the Ford or Lexus, some to their employees, maybe the landlord, more inventory, the landscaper, newspaper ads, and the nasty food in the waiting room. The same goes when building a bridge – a bridge costs a ton of money but it all goes somewhere – labor, supplies, material, engineers, heavy equipment, tools, etc. Plus we get a bridge out of it! The same applies to green energy – plus we learn new skills, can export to other countries, build them where jobs are needed, reduce pollution, and maybe even save the planet if it is not too late.
As a bonus a lot of this money is taxed so our government can do boring government stuff like defend America, prevent pandemics, cure diseases, develop medicines, explore renewable energy, etc. When you hear pundits and corrupted politicians say we can’t afford infrastructure or green energy what they really mean is that their wealthy friends want to pay as few taxes as possible. They want to siphon money out of the economy with all their little loopholes but they don’t want to put money back into the economy – the wealthy and the predator elite are the blood clots and the stab wounds of our economy.
When it comes to the economy – remember a couple of things:
- When we buy a burger, fridge, or truck our money isn’t burned – it flows
- The more of our money that flows, the better
- When we invest in healthcare, infrastructure, and green energy we don’t burn the money – it flows and we get even more out of it (like an investment)
- Think of yourself as an organ in the human body, money will flow its way back to you
- Forget about the “trickle down” con job … remember to “go with the flow…”