I don't have a source, but I recall the claim from somewhere.

The idea is that circulation of money is good for an economy, and that those at the bottom will spend most if not all of their money, so things like food stamps will circulate a lot, helping the economy a lot.

In high school, my economics teacher had us sell a pen for a dollar, and then continue that with each person for a few times, so that we had sold the same pen to 4 people. He then asked what the pen was worth - we said $1. He said no, it's worth $4. That's the general idea.

Well, the last owner should have sold it to the instructor...But of course he would not need one so it was worth nothing to him.

You can ignore supply and demand if you wish, but eventually a relative value will be produced.

Check here:

https://en.wikipedia.org/wiki/Perpetual_motion

It's easy to find and provide sources for the claim:

"When Moody's Analytics assessed different forms of stimulus, it found that food stamps were the most effective, increasing economic activity by $1.73 for every dollar spent. Unemployment insurance came in second, at $1.62, whereas most tax cuts yielded a dollar or less." http://www.economist.com/node/18958475

"In findings echoed by other economists and studies, he said the study shows the fastest way to infuse money into the economy is through expanding the food-stamp program. For every dollar spent on that program $1.73 is generated throughout the economy, he said.

"If someone who is literally living paycheck to paycheck gets an extra dollar, it's very likely that they will spend that dollar immediately on whatever they need - groceries, to pay the telephone bill, to pay the electric bill," he said.

"Tracking that single dollar spent through the economic chain shows what economists call the ripple effect, Zandi said. For example, that dollar spent at the grocery store in turn helps to pay the salaries of the grocery clerks, pays the truckers who haul the food and produce cross-country, and finally goes to the farmer who grows the crops." "

"The report pointed to expanding unemployment benefits as the program that gets the next biggest bang for the buck. That's because, although the unemployed are already getting checks, they need to spend the money. For every dollar spent here, the economy would see a return of $1.64, Zandi said." http://money.cnn.com/2008/01/29/news/economy/stimulus_analysis/

You'd do well to investigate your "not buying" the findings of economists. What's behind your resistance to accepting that food stamps have a demonstrably positive economic effect for children and families and the economy at large? Seems that your own prejudices might be getting in the way of accepting facts and beneficial public policy.

"Economists consider SNAP one of the most effective forms of economic stimulus. Moody’s Analytics estimates that in a weak economy, every dollar increase in SNAP benefits generates about $1.70 in economic activity. Similarly, CBO rated an increase in SNAP benefits as one of the two most cost-effective of all spending and tax options it examined for boosting growth and jobs in a weak economy. "

source: http://www.cbpp.org/cms/?fa=view&id=3239

Feel free to go ahead and read some facts on the matter, you may be surprised, the full answer is provided at the link

Q: Has the Obama administration started a program to use "taxpayer money" to give free cell phones to welfare recipients?

A: No. Low-income households have been eligible for discounted telephone service for more than a decade. But the program is funded by telecom companies, not by taxes, and the president has nothing to do with it.

http://www.factcheck.org/2009/10/the-obama-phone/

I just don't buy it. If it were true then why not increase food stamps a hundred fold and we'd all get rich because of the yield.

Think about it, how does someone putting a dollar into the market change that dollar to 1.73? Defies logic. Plus what about the government costs to get it to the recipient?

Joe spends a dollar at the grocery store to buy a dollar candy bar. Someone explain to me how it becomes 1.73 because I am not seeing it.

I think they're assigning a numerical value to the value of circulation.

It's of course true that $1 can't magically become almost $2 literally.

The real question is why you don't buy it. Either provide sound economic facts that disprove what Moody's Analytics demonstrate, or admit that you simply don't care that food stamps are an economically positive policy — that you're against them even though they benefit citizens and the economy at large.

Then you can reflect on why you'd be against something that's proven to help people and the economy and how your being against it — the facts be damned — actually helps anyone.

"sort of like farming."

Whatever you think of welfare to farmers, your food would be more expensive without it. So you also benefit from that welfare.

You can buy soda including cold bottles out of the case with food stamps and you can get deli food after it has been placed in a separate case just not while it is hot.

You can also use your food stamps at Dollar Tree and they now have a dairy case along one wall in addition to the other food.

You can use your food stamps to buy food at convenience stores where you get gas.

Perhaps because they never learned how to cook? This is true of many on food stamps (as well as of many of the well-educated computer programmers I work with.) Perhaps because their power has been turned off, and they don't have a way to cook anything? Should their children be forced to eat cold spaghettios every night?

Yes, I have been on food stamps, when I needed them. For every donut-buying Monster-drinking food stamp abuser out there, there are scores more who use them as they are intended - to feed themselves and their children. Let's not throw out the baby with the bathwater.

Well, I'm not sure I accept your opinion as superior to his.

Circulation is valuable to an economy. If I sit on my money, it doesn't help anybody. If I spend it, and then those folks spend it as well, it benefits numerous people and businesses.

The particular example may not be the best, since it's the same pen, but in reality, it doesn't happen that way - I go out to eat, the employees at the restaurant spend their income on other things, ...

It was your pen scenario.

In your restaurant example, actual economic activity, including profit, is generated.

Circulation of money is valuable only if something is created economically. Money in a Ponzi scheme circulates, but it is the the same dollars, and nothing is created.

"Money in a Ponzi scheme circulates, but it is the the same dollars, and nothing is created."

Sounds like Wall Street.

I've answered this question twice now in response to your comments.

I'm pretty sure they're using some sort of numerical analogue for the value of circulation - it's not a literal equation that money somehow magically multiplies.

Your premise that a dollar has been taken from you to give to someone else is woefully simplistic. Rather, it's like using .000000001 cents in revenue from many, many people to account for each dollar provided in food stamps.

Your thinking is faulty on this, fyi.

Gross domestic product is the measure of the economy. This includes goods and services produced. The manufacture of the pen was goods produced. The subsequent sale of the pen is services provided.

Joyce pays Joe $1 for to cut her lawn, Joe uses the $1 to at the barber shop. The barber uses the $1 to buy a new pair of scissors, etc. etc. This is the multiplier effect. To not recognize this, you must then conclude that the economy cannot be any larger than the money supply.

Nice how you assume that all who need or use food stamps are stupid. Poor is not equal to stupid. I have been on food stamps in the past, when my husband lost his job and we couldn't survive on just my pay. I later graduated cum laude from Washburn University and am now gainfully employed in a high-tech field.

The larger issue with the example above is that instead of making a transition possible, we have made it all or nothing. If she works more hours for one or two weeks a month, she loses benefits. The risk of loss is greater than what she gains by working a few more hours. We need some kind of middle ground for transitions to full-time work, so people can eventually get off these programs, as I did.

Technically, she is not defrauding the gov't (only morally, IMO). There is no line of questioning on the form that asks: "Do you routinely not answer the phone if you know it's the office asking if you can come in and work extra this afternoon?" or "Do you buy frivolous treats for your kids and cigarettes, pot, or cable TV for yourself?"

Furthermore, I suspect that the overwhelming majority of other assistance recipients would fail the means test if these questions were asked.

"How many 'needy' recipients meet some or all of this woman's profile traits?" -- Good question. Now, do the work and provide an answer.

Or, do you base your conclusions on a single example, without doing any of the actually difficult work of thinking your conclusions through, and determining if your sample size is inadequate to generate conclusions?

It is one thing to call food stamps, or more precisely Electronic Benefit Transfer, a welfare program with inherently significant fraud and abuse that has been well documented.

But don’t try to justify it as an economic development program.

"But don’t try to justify it as an economic development program."

Why not, when it has positive economic effects? And more accurately it's an economic stimulus program, one would think.

Right, Bozo, that dollar spent does not "vanish into the ether". Of course, it wasn't created that way either. It was earned by someone else, then taxed, then laundered through the government bureaucracy who then spits out fifty cents. So for each dollar being given away in the form of food stamps, two dollars have to be removed from another earner.

We may deem that to be good public policy. I'm not arguing that. But to suggest that the dollar's worth of food stamp originated with the government is not true. It is nothing more and nothing less than wealth redistribution, something you argue vehemently against when it flows the other way.

"Of course, it wasn't created that way either."

Actually, it was. It's an abstraction created by the US Govt.

"It was earned by someone else, then taxed, then laundered through the government bureaucracy who then spits out fifty cents. So for each dollar being given away in the form of food stamps, two dollars have to be removed from another earner."

Every cent collected by the government gets fed back into the economy, whether it's in the form of food stamps, or in the form of salary to administrators (who spend that salary,) payment for supplies and services to private vendors (who spend those payments,) and on down the line.

"We may deem that to be good public policy. I'm not arguing that. "

No, you're arguing something that doesn't exist.

"But to suggest that the dollar's worth of food stamp originated with the government is not true."

Aside from the initial issuance of a dollar by the US Govt, there is no "place of origin" for any dollar circulating the economy.

"It is nothing more and nothing less than wealth redistribution,"

Wealth redistribution happens all the time, in both the private and public sectors-- that's essentially the definition of a currency-based economic system. And over the last 30 years, that redistribution has been extremely lopsided in favor of the very wealthy.

No, Bozo, it wasn't created by the government. Whenever any government, ours, the Roman Empire, whatever, issues currency, it's simply trying to put a value on something, relative to something else. How much value does an ounce of gold have relative to a pound of wheat relative to a plot of land relative to an hours worth of labor. Even in a barter system, where currency isn't used, values are assessed to those things. That, for the lack of a better term, is the "place of origin". This isn't a chicken and egg thing, where we never really know which came first. Here, we do know what came first. That being that something of value. All the government is doing by issuing currency is the recognition of that.

I guess every cent gets fed back into the economy, just like corporate welfare, welfare for the poor, etc. The question is, do we desire to take from one person so that we may give to another. That question is equally valid for the wealthy getting corporate welfare as it is for the poor getting welfare or for the bureaucrat being the middle man between the two. The answers to those questions will always be simply what values you have. For me, I have no problem with any of those, if they can be justified.

"Every cent collected by the government gets fed back into the economy, "

Some of it goes to other countries, so that's not 100% true.

Besides, it raises the question of whether it is ethical to take (collect) then give to other people. In the case of people who are poor and have no means of getting into a better selection, I think it is ok to be unethical if you keep fellow citizens from starving or not having a roof over their heads. It isn't so ethical to take money from one person so another can read books or surf the web for free, or build sports complexes or bus lines that never break even.

"Wealth redistribution happens all the time"

Sure. My boss redistributes me some wealth. He does it because I provide a service to him, not because I can garnish his wages or put him in prison. While the end result is the same, taking money by force is different than being paid to do a job.

"Food stamps bring tax dollars back home to the community"

Where did they go before they came back, these wandering dollars?

Your thinking is simply faulty on this.

Provide authoritative support for your claim that "the government is compelled to tax two dollars to produce that one dollar food stamp," or admit that you're simply making things up or repeating other faulty claims.

By the way, just a casual Google search indicates that every dollar spent on NASA is worth 8 dollars to the economy. So really, by this logic, we should cut food stamps and explore space instead, because the country would be better off as a whole.

I tried to find some data for how much a dollar of tax cuts are worth to the economy - but I don't have time to wade through all the partisan articles about tax cuts! But the problem with the $1.70 argument is that there are plenty of things (NASA, for example) that are better for the economy than food stamps and it easily becomes an argument AGAINST food stamps.

After all, what if we cut food stamps and people had more money in their pockets due to tax cuts, so they bought more expensive dog food and it turns out that every dollar spent on expensive dog food brings $2 of economic benefit.

Is this what you mean?

http://www.factcheck.org/2012/01/newts-faulty-food-stamp-claim/

They died...would you prefer that?

Please stop obsessing over the free phone thing...the Life Line program started long before Obama...

Would you like it better if we just rounded up all the poor people in a field somewhere and just waited for them all to die?

Your premises are faulty, and thus, as certainly as the sun rises each morning, your conclusions are faulty as well.

And your use of the term "laundered" reveals the partisan / political ideology behind your beliefs. You apparently see the government as separate from yourself, and evil, when in American, we the people are sovereign.

I share the Founders' view as seen in the Declaration of Independence: the American government was instituted to protect our inalienable rights. Government is not the problem: citizens who vote in representatives with no clue about the genius of the American government are the problem.

And citizens who can't accept rational thinking, but rather base their actions and claims on faulty premises, are the problem, too.

My use of the term "laundered" may be revealing, but your guess as to what I meant by it is wrong. I do not believe the government is evil. Just the opposite. I have an inherent trust in our government and am willing to give them the benefit of the doubt until proven otherwise. However, I do believe that the larger a bureaucracy gets, the more inefficient it becomes. And the bureaucracy driving our government certainly has become very large and therefore, very inefficient. Taken to an extreme, you have a Soviet style collapse and it will happen to any government, regardless of whether it's a left thinking government or a right thinking one, or something in the middle. When the bureaucracy becomes too big, it eats it's young. That would be us.

Now tell me Alyosha, how exactly does the Declaration of Independence or the Constitution address that issue? What is said about the size of the bureaucracy, it's inefficiency, it's effect on the economy, etc? Maybe I'm wrong, I don't profess to be a Constitutional scholar, but I think those two documents are silent about the issues I addressed. So while I applaud your flag waving and stand at attention when you bring it up, it's still not in keeping with the issue I raised.

"The definition is the same as Justice Potter Stewart's of pornography, I know it when I see it."

That's not a definition-- just a flimsy excuse to be arbitrary.

Regardless, the very purpose for bureaucracies is that they are more efficient in dealing with certain tasks required for civilization than dealing with them in an ad hoc, onesy, twosy way. As a matter of fact, civilization could not exist without them.

That's not to say they shouldn't be made as efficient and user-friendly as possible, but railing against government simply because it's government is just so much pointless whining.

"Define "too big"

Too big is when government has time to care about our health, what we put into our bodies, whether we buy sex retail, whether we wear a seatbelt, whether we abort fetuses or whether our Coke is over 20 OZs. Government should be in the business of guaranteeing rights, not protecting people from themselves. Government that has enough time to worry about me hiring a prostitute is too big.

Hope that helps.

"You apparently see the government as separate from yourself, and evil, when in American, we the people are sovereign."

We are the sovereign, government is our employee. The government is utterly and completely separate from us. I don't even want it close to me. The help can keep out of my sight.

As for rights, don't confuse welfare, libraries and eating with inalienable rights. You are making a mockery of the constitution when you do that.

Your premises are flawed.