OK, let me modify the OP (If I may). THis is a little problem I have been tossing around the office for a while.
The Economist reported that when oil hit US$50/bbl the worls was sending 300M$ per day to the Gulf States.
OK, half (150M$) goes to Saudi Arabia, half goes to the others (let’s say). Half of that (75M$) goes to the Government. That leaves 75M$ per day. (Please let me know if these figures are completely off.)
There are about 16M Saudis (plus 8M expats). If we gave each Saudi a fare share of the cash, how would that screw up the world/local economy?
This is different from the OP as this money is (supposedly) coming into the Kingdom anyway. Now we are talking about slicing up the pie a different way.
So are my figures roughly correct? What would happen?
It’s not remotely meaningless. Thought experiments not unlike the OP’s won the Nobel Prize for Milton Friedman.
Also, I’m not sure what you meant by “loose money” in a previous post, but if you’re talking about cash and cash equivalents then you’re wrong and if you’re talking about currency then it’s irrelevant.
To the OP: you need to refine your question. First reassess Gate’s wealth based on the information in the thread. Then define the situation better.
Do we have to assume that Gates must liquidate his holdings to cash before dispersing or can he give cash and stock?
Are we supposed to consider the implications on the economy of his or other’s liquidation or just presume he has the money under a mattress?
I think this is pretty relevant. Bill Gates does not have $60 billion in cash lying about. He has a lot of stock. If Mr. Gates walked to Wall Street and said to sell it all I think he would find he had a lot less than $60 billion when it was done. Putting that much stock on the market at once would surely depress the value of the stock dramatically (doubtless he owns stock in lots of things but I am guessing he has enough Microsoft stock to tank the share prices of that company all by himself).
One of my pet peeves about this Board concerns posters who are so eager to jump on another’s post that they decide to ignore that part of the post that makes theirs irrelevant. Like the part of my post that said “any answer that is physically possible is equally as likely as any other answer.” That’s called science.
Although economists like to pretend that their discipline is predictive, in practice a dozen economists will produce twelve disparate predictions, all based on their own perceptions of what past performance means. We - we reporters, commentators, humans - look back at these twelve predictions, pick the one closest to our perceptions of current reality and anoint the predictor as having prescience. Yet if we take the next span of time and the next set of predictions we find that the anointed one has a one in twelve chance of repeating. Your syntax is a bit wonky, but this is perhaps the same thing as saying that economics is struggling at the macro level.
Next. When I say “loose money” I mean that even as a thought experiment one cannot take all wealth - real estate, art, etc. - and convert it to money to be equally divided among all. Wealth is not the same thing as fungible funds, or the various definitions of the money supply.
A partial answer can be found in the Straight Dope Archives here. The question in that column was what happened to the gold Spain got from the New World, and part of the answer was that it caused inflation in Spain; too much money chasing too few goods.
In the case of the hypothetical situation in the OP, the two million dollars is given only to all Americans. If you consider the American economy as a closed system, then presumably prices will adjust, and the economic situation of each American will be unchanged. But in the global economy, you’d have 300 million people with vastly greater purchasing power, while the other six billion have the same purchasing power as previously. So goods elsewhere in the world will get more expensive for the locals as Americans spend their two million dollars.
I don’t know what that quote is called. Untrue? Irrelevant? It’s physically possible that I will get up on my desk and dance a jig naked in the next 10 minutes, but it’s not as likely as that I will continue to surf SDMB. It’s possible giving $2 milliion to every citizen will result in each of them burning a stack of one-dollar bills, equal to their weight, but not as likely as the outcomes discussed here.
That is more or less what I was saying. You and I are certainly free to believe that macro-economics is not predictive enough to qualify as hard science. That doesn’t mean it’s worthless to even try, or hypothesize.
As long as we’re discussing meaning, could everyone posting here please try to read the OP? Nowhere did he suggest giving everyone a $2 million windfall. Nowhere is there an implication of hyperinflation as mentioned in Aesiron drive-by. His thought experiment was to create an annuity of $50,000 a year, paid out in approximately thousand-dollar weekly payments. This is obviously a wholly different notion.
As for outcomes: What outcomes? Not one single person here has tried to compose an answer showing what would happen to the economy given the OP or a monetarily possible variant. The oil countries’ histories are interesting but irrelevant.
I feel fairly sure, however, that I could compose a legitimate antithetical alternative to any scenario, which is my definition of meaningless. There is no factual answer to the question.
Bill Gates has a net worth of about $48 billion, mostly in Microsoft stock. In addition, he has endowed the Bill & Melinda Gates Foundation with about $28 billion in assets. I imagine that these assets have been diversified to give the foundation financial stability.
Of the annual income thrown off by his fortune (which probably isn’t that much, since Microsoft doesn’t pay that much of a dividend), Gates will spend some small epsilon on personal consumption and reinvest the rest in other financial assets. The income produced by the Foundation’s assets ($1 to $2 billion per year) is spent on the various health and education projects which are the Foundation’s purpose.
Now, then. If we assume that Gates wanted to liquidate the Foundation as well as divest himself of his own fortune, he could endow about 38,000 families with $2 million each. Many of these families would no doubt move most of their windfall out of Microsoft stock, since they would want to be more diversified. This would have a modest depressing effect on Microsoft’s share price.
Since these families wouldn’t be as rich as Gates, they would probably spend down their endowment more quickly than either Gates or his Foundation woud, and they would use more of the income from the endowment for consumption rather than reinvestment. This would result in a slight macroeconomic shift from investment to consumption, which would hardly be noticeable in a $10 trillion economy. Some of the individuals involved might cease to work, which would partially counter-balance this effect.
Among micro-economic effects, 38,000 families would be happy, but whatever good works the Gates Foundation (or whatever other charities he might endow with his remaining fortune) might perform would be lost, and the people who work for the Foundation would be out of jobs.