new figures,families 'worse off under abbott., page-55

peterd, I said yesterday I didn't think you understood what economic was and I see that you still don't. Understandable it's not a simple concept, it’s a social science

The stimulus that the government rolled is criticised by some here because they don’t understand multiplier effect in economics. We don’t know what would have actually happen if the stimulus was not used but economic modelling would suggest that people would have spent less leading business have less turn over and profitability which leave them needing to put staff off and that becomes a vicious little circle of more unemployed spending less and business putting off more people and/or closing down.

Now that is a the private sector level, for government more people unemployed means having to pay more welfare while pulling in less revenue from income tax and because people are on welfare the send less so business make less profit and pay less tax.

That is the spiral that occurs in a recession, now rather than sit there paying welfare while receiving less tax revenue you spend that money to stimulate the economy. That keeps people employed, spending and paying taxes, business make better profits and pay more taxes.

Money goes round and what is spent on stimulus is mostly eventually returned in taxes, for an economy to work it needs people to be employed and spending. We have low unemployment and low interest rates which is helping keep the economy moving.

Ok we have debt but so what, Ok maybe it’s higher than it could be but whats the point of not being in debt while people lose the jobs, spend less, business go broke leading to less tax revenue.