So America has a population of just over 325 million give or take. I don’t know what the adult population is but what would happen to the economy or anything else for that matter if our govt or some insanly rich guy gave every American citizen over the age of 18 just $1 million dollars.
Technically that’s quite doable right? Is it even legal? Would this mean that if I was a billionaire I could literally credit every American $1 million and no one could stop me…or would they stop me?
I’m just curious what the repercussions would be or why it would not be possible to be allowed to do such a thing.
The idea came to me after Bill Gates, now worth $80 billion once said he and his wife were giving most of their money away ( I assume to their foundation). Would it be possible for him to literally write a check to every American or would the Govt stop him? Would our economy flourish or falter? I’m sure it would cause some sort of turmoil or maybe devalue our dollar? Could someone else outside our country destroy an economy by providing money to another countries citizens directly?
The value of the US dollar would go down incredibly, with wild and wacky (and likely debilitating, at least in the short term) effects on the economy. Real estate would go nuts, as most mortgages could be instantly paid off – home prices for sale would skyrocket as the dollar is suddenly much weaker. I’m sure there’d be plenty of other nutty effects.
A billionaire colud not give every American $1 million. You seem to be off by a few orders of magnitude somewhere in your thinking. No government or individual has the 245 trillion dollars involved. (Hope I did the math right)
OK, let’s take Gate’s $80 billion and divided it up by 325 million Americans. That’s
$246. Even if adults were only 1/3 the population, it still comes out to less than a grand. Got any more ideas?
If it’s your money it’s totally legal, although we’re talking about $300 trillion I believe. But sure, if Bill Gates wanted to award 8000 Americans $1 million each he can certainly do that.
But if it was possible, the short answer is that a middle class person would have $1 million in the bank and if you had only $250,000 you’d be in poverty. Because prices would rise to meet the amount of money people had to spend.
With that huge amount of money given to every American, the hypothetical rich dude would have to pay a gift tax on each $1 million. So I assume the federal government would welcome it.
But then the gifter would be spending more than the original $325 trillion, so the hypothetical scenario becomes even more costly.
What would happen? Dunno. I assume retailers would see the most benefit, both big & small. You’d see a lot of people buying electronics, luxury items, cars, houses, etc. Others would be going on long put-off vacations, some would probably quit their jobs entirely or retire early. We could be looking at a sudden, catastrophic labor shortage.
I don’t see why it wouldn’t be legal. The eccentric billionaire has to pay a 14% gift tax on the amount exceeding $5.45 million over his lifetime. So each of us winds up with $860K.
It would cause inflation. I expect somebody would sue because it wasn’t more.
If the government did it, it wouldn’t be much different from simply increasing the deficit (currently at about $440 billion).
Economic growth is fueled by productivity, not charity.
One must also consider that nobody has $325 trillion just laying under one’s bed. Money is actively doing things: probably mostly investments in companies, savings in banks, etc. The act of redistributing lots and lots of money from investment into consumption would surely be a radical shock to the economy.
Well, first where would the money come from? Because if it exists now, it is being used for something. If it stopped being used for that something, then that value would disappear, so it would be a wash. If the money were just “created” then it would look suspiciously like inflation. We hear stories of countries going through hyper-inflation where people had to have a wheelbarrow full of currency to buy a loaf of bread. It probably wouldn’t end up like that, but over a period of time there would be wildly increased prices. Best case is that eventually equilibrium would occur and everyone would feel exactly how they do today about their purchasing power.
Yes, we could easily print up a bunch of $100 bills and hand every citizen of America a stack of 10,000 of them.
What would happen? The value of the dollar would plummet to the point where it would be essentially worthless.
So the real-life effect would be to wipe out all loans, debts, savings, and bonds denominated in dollars, because the dollar would be effectively demonetized. If you had $10,000 in the bank, that’s gone. On the other hand, if you just bought a house and owe the bank another $300,000 on the mortgage, congratulations, you just got a free house. On the other other hand, the bank is now bankrupt because the value of all the loans and assets it used to have is now zero.
A more reasonable straightforward approach rather than just wiping out the dollar is something like the Biblical Jubilee with forgiveness of all debts and freeing of all slaves.
The problem with mass debt forgiveness is does that include mortgages? Does the bank have to eat the loss of the mortgage? Or do they get to take the house? And if they knew the Jubilee was coming up, they’d never offer mortgages or loans that weren’t paid off before the Jubilee. And credit cards would have to switch to become debit cards. Oh, if you have money in the bank, isn’t that money a debt from the bank to you? So now the bank gets to keep it?
That being said, I think the OP means every American gets $1 million, but there is no inflation. He’s asking more, “What would happen if we gave American X amount of buying power in a big-chunk dose” rather than asking about how a dollar loses value.
So if there is no inflation:
The vast majority of Americans would become debt-free. Wise ones would save up a nest egg. People would go on a big spending spree, upgrade to better apartments, houses, cars. There might be less impetus for things like healthcare reform, unfortunately. Many people would go unemployed for a while while they celebrate with a vacation. The economy would go nuts.
). Could we make up the difference in Euros?