In the original form of the stimulus program, your assertion was relatively true – however, once seniors and others who had no tax liability were included, at least that aspect indeed became a government handout.

Comment #3 and #4:

The point was that there is potential monetary capital in goods and services. If you go to Wal-Mart, they have thousands and thousands of dollars worth of potential capital sitting on its shelves in the form of goods. They also employ pharmacists, opticians, mechanics, etc. who have potential capital in their services. Thus, Wal-Mart has more capital in goods and services but less monetary capital while you, the shopper, have fewer goods and services but more monetary capital that you’ll use in a fair exchange at an agreed-upon price.

Comment #5:

In most cases, you are correct but that also assumes that the economy grows at a rate which keeps the value of a dollar constant. But if the economy were to shrink radically yet the money supply kept the same or even increased, each dollar would be worth far less and inflation would become rampant (unless the currency was backed by something else of value, most people think of gold as an example.) Think of the Carter Administration and how inflation ravaged the country then.

I enjoy the discourse and the chance to explain my thinking further.

the fed does most of their dirty work with Open Market Operations (http://money.howstuffworks.com/fed10.htm), where they buy and sell government securities in order to achieve a target interest rate. when you hear the “Fed lowers rates by 0.25%”, they’re really purchasing securities (creating more money supply) such that the Fed Funds Rate drops by about 0.25% (http://www.federalreserve.gov/fomc/fundsrate.htm).

I’m not sure what you mean by the “potential capital” tied up in goods and services — I thought you said at the outset that in your model goods and services are a type of capital. if they are a type of capital, how is potential capital unlocked from them?

your description of the turn-over of money for goods, for more money and more goods is well established — see Velocity of Money (http://en.wikipedia.org/wiki/Velocity_of_money). I tried to find current estimates for this velocity, but it doesn’t seem to be something that economists track (probably because there are too many measures of “money” in the economy — M1 (currency), M2, M3, etc.)

I don’t think there is any evidence that capital flows from those who have more to those who have less — I think that is borrowingly very liberally from the process of osmosis (high density disperses into low density). If capital flowed the way you theorize, there would be no ‘cycle of poverty’ as the mass of wealth in this country would become distributed among the lower classes. instead, a small percentage of the most wealthy people in America (and indeed, the world) control the majority of the wealth/capital. (not that there is anything wrong with that…)

“trickle-down economics” implies that tax cuts for the wealthy result in increased investment (capital to create businesses and jobs, therefore employement; and/or innovations which lower the cost of goods for all) and/or increased consumption (the rich buy a yatch, which employs boat builders, who buy McDonalds, who hire minimum wage employees, etc). see http://en.wikipedia.org/wiki/Trickle-down_economics

I haven’t read enough of your site to be sure, but if you’re Republican, you’re likely in favor of lower taxes. if that’s true, you should have no argument against that aspect of the stimulus.

the twist with the stimulus is that you don’t have to wait until April 2009 to get the tax cut as a refund (or reduction to your amount owed) — you get it today! lucky you! actually, considering time value of money, inflation, and the declining value of the US dollar, the $600 you get today might be worth a good deal more today than in 365 days (so don’t go stuffing it under the mattress)