A Very Simple Math Question

It's okay to discuss the math formula aspect of this topic but please save food stamp debates for another place.

Absolutely! You know I wouldn't start a controversial thread.

I'm not questioning the wisdom of paying small non-profits $75,000 per year, tax free, to actively recruit new food stamp recipients.

I would just like to find the formula so I can apply it to my own life. To receive $9.20 for every $5.00 I give away, sounds like a dream come true.

It's true too. I don't care to have an argument about food stamps either. Those numbers are very precise though..................surley the USDA used a particular formula to reach the $5.00 = $9.20 claim.

I would like to find the formula.

Wow. Such a cynic. I like it.

A cynic on CR4? That's not something you see very often.

That math makes sense of it.

http://www.random.org/

I think the benefit comes when the owner of the grocery store pays wages and spends the leftover profit on a new boat.

Quantum economics?

That's an interesting link and it might possibly tie into how they arrived at those numbers, but how?

I think lyn is on the right track also.

However, the USDA doesn't make the statement as a guess or a maybe...............they state it as fact.

This is actually looking more like a challenge question.

What I would like to do, is to take the five dollars in food stamps that is spent at the grocery store and follow its path to the point that it becomes nine dollars and 20 cents that gets poured back into the community. Winner gets a doughnut.

You don't have to look very far Karamat. They have achieving this sort of return in Greece for the past few years.

Hey, where is my doughnut ?

Gluten free doughnut???

Sure thing!!!! I don't want to ship it though. Just get yourself a doughnut of your choosing over there and have them bill it to GlobalSpec.

The billing address is on the bottom of the page.

Get yourself a dozen.

Quantum... hm-m-m? Is that what has led to the discovery of Dark motives and Dark profits?

The origin of fuzzy math and the associated proofs are found in the musings of politicians.

What so complicated. We got to pay tax money people to give away more of our tax money. Not hard to figure out.

Excellent links Usb!

To a certain extent, and in some ways, the multiplier effect almost makes sense. Knowing that money in the form of food stamps is coming into his store, the shop keeper gains a certain degree of confidence and is more willing to spend the money in the community.

I notice one component that is missing from the big picture though, and from the formulas as well. What does the real value of that $5 become when the government has to borrow it and pay interest on it?

I don't think we can look at $5 in food stamps like a $5 bill either. Everything associated with that $5 food stamp, (from the Government end), should be deducted from it's value. I would imagine that there are several administrative costs, processing, etc. that should be taken right off the top, as money gone.

Can we plug 5 into any of the formulas in the link and arrive at 9.2?

It doesn't look like it, but I'd be willing to bet that they used a very similar formula to arrive at that number.

It's looking like formulas in mathematics and formulas in economics are very different beasts.

A mathematician could walk me through any formula and explain to me exactly how he arrived at the answer. I seriously doubt that an economist could do the same with the 5 to 9.2 equation. Until someone can..................shame on the USDA for stating that as fact.

Never take anything a government agency says as hard fact. Facts as quoted by gov are manipulated to suit their agenda. If you put what the buraucrats say in perspective, then you don't need no stinkin formula. If you plug in the FDA fudge factor of 4.2, the formula works.

I understand, but there are many people that don't.

When the USDA publishes numbers like that, there are a lot of people, including local politicians, that will look no further.

The mayor of a small town could look at those numbers and easily reach the conclusion, that for every $500,000 in food stamps that come into town, $920,000 in net spending in the community will come back. Until I can see a formula that backs that up, I consider it to be blatantly dishonest.

Not wanting to sound political, but wouldn't these kind of math "facts" persuade some to add to the dole?

Indeed it would.....................as would a $75,000 reward to a non-profit for signing people up.

Political, schlamitical.................it pervades every aspect of our lives. This really isn't a political conversation. It's about the manipulation of numbers to create the perception of an upcoming financial boon.

Who better qualified to discuss it than a group of engineers? People that deal in real numbers every day.

Since Usb was kind enough to provide the link describing Keynesian economics, I would like to see some examples in which it worked as predicted.

Oops..................it's not necessarily a manipulation of numbers. If it's a fact, I don't think it's out of line to ask how those numbers were arrived at.

I had to take a year of Economics in college, as probably did the rest of you. The "facts" being published are a mathematical abomination IMHO.

I don't believe you can give away $5.00 and watch it turn into almost double that, when the Government is the administrator. Normally if the Government gives away $5.00, it costs an additional $5.00 to implement (or more).

I think that THIS is closer to "reality", especially after you count the various "bean counters" working for the store- to process the "paper", and the local and federal bureaucrats that will be needed to issue, check, and report on the process.

"It is likewise to be observed that this society(of lawyers) hath a peculiar chant and jargon of their own, that no other mortal can understand, and wherein all their laws are written,which they take special care to multiply;whereby they have wholly confounded the essence of truth and falsehood.---"

Johnathan Swift,Gulliver's Travels.

"Vir,intelligence has nothing to do with politics!"...Londo Mollari

The thing is, when the person gets the $5 in food stamps, they think they can spend $5 on something else. When they do, it actually costs $9.20 to get $5 worth because of inflation and taxes. Very sneaky of the government.

The simple answer is:

Figures don't lie.

But liars can figure!

The problem is these programs do not create wealth. They do speed the circulation of the dollar giving the illusion of creating wealth. For example, lets pretend an entity wanted to "prime the pump" and released 800 billion dollars into an economy. If this formula were true, this 800 billion would "create" 1,472 billion in the economy. I seriously doubt that anyone would even venture to try something this foolish, especially with someone else's money.

I haven't spotted, in my swift run through the posts, anyone adding in the $75,000 into the equation. Remember this is the local economy, so:

The $5 food stamp is spent in the local grocery

The person at the non-for-profit may well be a staff member and is therefore paid a wage and they buy a Starbucks* round the corner and a doughnut at Dunkin'/Krispy's (who said reading American crime fiction didn't pay??!). Even before they put gas (petrol) in their car, they've easily added another $4.20 to the local money-go-round.

If the non-for-profit staff are all volunteers (and even if they're paid), the organisation still has to pay utility bills, buy paper, pens and toilet rolls.

And if the local grocery is doing a roaring trade with all the food stamp recipients, he's able to trade up his old banger/clunker for a newer model at the car emporium next door, get the local signwriter to redecorate his shop, pay minimum wage to a couple of kids to mind shop.

Sorry kram, no formula as I don't have the data to work out the coefficients nor the time so to so. Maybe someone else could oblige?

Has anyone found a subsequent equation that uses that $4.20 to calculate what happens next?

_{*Other ready to drink coffee outlets are available. If you insist on drinking the foul devil's brew....}

No formula, but you're totally correct...............at least in some cases. If a few people in the community start a non-profit outreach program, they likely qualify for the $75,000 bonus grant for signing new people up for food stamps, and the $75,000 likely gets spent in the community. That would indeed boost the face value of the stamps.

It is a very common Government mistake, they have it back to front.

Somebody earns $9.20, they then "give" $5.00 to the government as tax, the government then gives this back to someone in the community as a $5.00 food stamp benefit.

It's funny. If investment bankers, portfolio managers, etc. make claims like this and the promises turn out to be based on false formulas........................they go to jail.

How soon we forget-

THEY get a few hundred BILLION to clean up their mess and then to park their profits with the Fed rather than take the RISK of making a loan to businesses or just plain folks with 720 credit scores.

Hmmmm

I gave you a GA because it's the closest to a real formula yet. I'm afraid I will never be able to understand this kind of math.

Your comment on the saving of the profit from the food stamps directly benefitting the rich..................................I don't even know what to say.

It seems however, that you agree with the USDA statement, that more food stamps leads to a growing economy.

I'm afraid I will never be able to understand this kind of math.

You are not supposed to. Try reading the tax code or the Obama health plan and see how much of it you can understand. I tried with the health care plan and couldn't get past page one. Nobody reads these documents because no one is capable of understanding them. I used to work as a technical writer and I was convinced that there was a special type of writer who wrote government documents. These were not poor writers, but people who could twist words around to the point no one could understand them. I'm sure you have read many mumble-jumble documents before. This meay be a bit OT, but describes my take on the topic as a whole.

"It seems however, that you agree with the USDA statement, that more food stamps leads to a growing economy."

I only agreed that there is a multiplication factor. I was trying to illustrate with a simplified model. It can lead to a growing economy if it is figured as part of an investment in that growth but not if it is used only as a sop to quieten the poor.

I much prefer investment into the infrastructure. We have bridges and roads in real need of rebuild, the time to do it is now, before we need to fully use them. The same type of multiplier works with this kind of insertion of money. This type of work brings in a real return on the borrowed money in terms of higher overall industrial and transportation efficiency.

I understand.

Would the same multiplication factor apply if we only gave food stamps to the people that truly needed them, shrunk government, never bailed out any banks or businesses, and lowered taxes....................allowing the people that earned the money in the first place to decide when and where to spend it?

I mean five bucks is five bucks right? I think the multiplication factor might be even bigger if we were to just let the guy/girl that earned it, put it back into the economy, and cut out all the middle men.

We agree on a lot of things, but not all.

Lets look at the USDA statement again.

In addition to directly helping individuals and families, food stamp benefits provide a boost to local economies because every $5 in new food stamp benefits generates $9.20 in total community spending.

Every $5 in "new" food stamp benefits generates $9.20 in total community spending.

I think we can assume that once people get on food stamps, most of them stay on food stamps. They use the word "new" for a reason. They are actively looking for small community based outfits, and are willing to pay them $75,000 a year to seek out people that currently aren't on food stamps and help them over the bridge to dependency on the government. These would be the "new" benefits. Once these people are securely on the dole, the multiplier effect stops and the benefits become a net drain on the economy. The only way to keep the multiplier effect going, is to continue to find "new" recipients.

The entire statement is a trick. If a person skips over the word "new", (which I think some of us have), they would read it as, " For every $5 in FS benefits, $9.20 in community spending happens". But that's not what they are saying. It looks good on the face of it, but once those benefits are no longer "new", they drain money from the economy..................lots of it. The entire concept is nonsensical.

I too believe in the multiplier effect. If the government wants to spend money to help people, it shouldn't be by finding ways to get them on food stamps. My suggestion would be to spend it on job training and internship programs throughout the high school years, for kids that aren't destined to college, so that when they graduate they are ready to enter the work force. The list of professions is endless. Culinary, all of the trades, auto mechanics.....................the list goes on. Kind of like that silly old saying about teaching a man to fish.

The entire notion of spending billions on fortifying the social safety net, rather than teaching people how to walk the tightrope is ludicrous.

On the healthcare issue....................well, the government has proven itself to be incapable of running anything efficiently. Major tort reform and the ability to buy health insurance across state lines would have been a good start. A had a doctor tell me that his insurance premiums were around $100,000 a year, just for him. The fear of lawsuits leads to redundant testing, massively high costs, and even death.........................there are many doctors that are more comfortable with saying that there is nothing that they can do and allowing a patient to die, rather than attempting a risky procedure and facing a possible lawsuit.

I don't believe that the 200 year sequence for civilizations is set in stone. I do believe that those that fail to learn from history are doomed to repeat it.

1. Many on this site, including me, are introverted misfits of a different type, we hide in our science projects or engineering designs.

Me too. But as I look around at what's happening around us, hiding seems to be an option that becomes less viable by the day. I don't think any of us want to emerge from hiding to find that everything around us has decayed to the point of no return. It would render anything we had accomplished, moot.

The formula is the same one used to calculate how much increase in taxes we'll get by cutting taxes. It's very simple. I don't have the formulas used, but here's how it works: The citizens get a tax rebate from the government, with that extra money they purchase things that causes production to increase that causes people to get hired and the people hired pay taxes that more than repays the rebates or other tax cuts. It really works. If you don't believe me, look at the change in our national debt since we've been doing this. Remember, this is economic laws, not Newton's laws.

Have some fun today

PAPADOC

RMFR

Right. I can see where this is a benefit on the local level......................it ties in with the "bring home the bacon" mentality that we have all, (or our representatives), have been abusing for decades.

The problem is, when it's expanded to include the big national picture, the results are dismal.

An important point to remember:The "Government" does not have any money of it's own.It has to be taken from someone else before it can give it away.TANSTAAFL comes to mind.

A very similar analogy to perpetual motion.

The perceived profit is merely reshuffled money from the same source:Other people's money.

Consider this:A country consisting of of 3 people, named A,B,C.

A owes B $10

B owes C $10

C owes A $10.

Collectively, the country is $30 in debt.

A pulls $10 dollars from his wallet and pays B

B pays C with this $10

C pays A $10

A puts the money in his wallet and everyone is happy.Collectively, the national debt is zero.

What really happened?

A is right back where he started.So is B and so is C.

As long as the money stays within the circle, everything works well.

When the circle is broken, or enlarged by sending the money outside of the circle, everyone is in a state of imbalance.This imbalance creates waves of "debt" that never settle, and creates jobs for accountants,lawyers,judges,etc.

Sometimes there is an event similar to a rogue wave in economics, that catches everyone off guard and causes extreme damage.

So in some respect,economics can be compared to known physical laws.

It would be nice to develop an analog for comparison to all conditions, but it is beyond my knowledge data base.

Perhaps money flow could be compared to amps of electricity,the speed of circulation could be compared to voltage, and resistance losses due to friction could be compared to taxes.I am sure there are many other similarities that I failed to list or see.

Anyone want to try taking this much further, or is it just a wild hair?

That would be an interesting thing to try, but I think we have lots of threads that already cover it. Basically every one of them that claims more energy output than energy input. There hasn't been one yet that's feasible.

As I said:TANSTAAFL.

To give to one, you must take from another.

Hey, that's the formula they use!!

Have some fun today,

PAPADOC

RMFR

Many times I have seen people here with little or no engineering knowleadge told to stay out of engineering. So I propose that people with little or no knowledge of economics, accounting or even basic mathamatics stay out of those subjects?

For example HiTekRedNek's country of 3 people does not have a $30.00 debt. He has neglected to account for the accounts receivables of the citizens. Accounting 101, worth = cash on hand + inventory + receivables - payables. Does he work for Fox news?

To the original question, of course $5 spent in an economy doesn't stop there. The money is spent and respent by every person who gets their hands on it. Or perhaps the OP has the first nickel he ever made still stashed in his sock drawer. Would have to be the sock drawer, putting it in a bank would let it loose into the economy again.

At least Passingtongreen and a couple of others get it.

Lets expound on HiTek's idea and look at it like this:

USDA is a CR4 member. They start a thread that says they have a machine, (the economy).

They go on to explain that the guts of the machine are far beyond our comprehension.

But........................they have come up with a way to feed 5 volts into the machine and out the other side 9.2 volts is released.

They go on to explain, that regardless of the volts put in, the output voltage will always be 1.84 times greater.

I don't think that thread would go well.

Yes. I would argue that economics shouldn't need math beyond algebra -- and the "financial" definition of derivatives doesn't seem to be the classical mathematical version. If it were, then it wouldn't be so hard to most people to follow. (Or is calculus beyond most people?)

Ditto for legal language. There was a trend at one time to simplify legal language into plain English but it didn't catch on enough to last. When there's fine print -- both in economics and contracts, it spells trouble; usually for the little guy.

OH Great Pontiff of Economics,please explain how all of the economics experts got us in so much trouble, all over the world?Surely Greece has tried the

"OVER UNITY" approach, and look how well it has worked? Sooner or later the machine runs down.Surely they have economic experts in Greece..if not perhaps you could condescend to lend your wisdom to solve their problem.Simply give more away, and the country will recover.

You say the money is spent and respent, over and over again, but you neglected to factor in the tax burden every time the money changes hands, which reduces the actual buying power of the money.

Can you buy groceries with receivables?Perhaps you could float a check till you get paid?

Johnathan Swift had it right about lawyers, and the same applies to economists.

At least HE got it right.

Do you work for CNN?

You might not be accounting for the dwindling money supply, and the subsequent "quantitative easing" (spelled printing) required to resupply it.

We do not have a one world currency, and our (US) huge trade deficit is sucking the cash out of the country. If the whole world traded in gold coins of identical weight, how much gold would exist for the trade of goods in the US? Greece? (fill in name of most countries here)?

The spending of money that one does not have for the purpose of stimulating an economy is the work of fiscal fools or worse.

I am afraid the correct answer is "worse". Incidentally, I work for myself.

For a VERY long time, and several wars (or "conflicts") AND a few trips to the moon, the good old USA managed to generally balance its budget (a little up or down, but fairly close to centerline). Then, the "Great Communicator" (Mr. Reagan) decided that we needed "trickle down economics" to make everything "better" and, somehow, we ended up in the red. That got fixed and we were actually paying down the debt when "The Decider" DECIDED that Rich People were paying too much tax and that we needed to teach Osama a lesson- AFTER we taught that bad-ass in Iraq that HE was tougher than his dad.

NOW, since trillions of NEW debt did not "improve conditions" enough here in the good old USA, we needed the folks on Wall Street to show us how to destroy an economy in two easy steps while feathering your own nest adequately. Then, so that those "wise folks" would not have to pay too much for their greed, and because just about everyone outside of Wall Street WAS paying for their greed, we borrowed "just a little" more to try to save the American dream from totally vanishing.

The "cost of money" is why those (borrowed) $5.00 worth of food stamps is generating $9.40 in "business".

Is it only $5 worth of food stamps that generate $9.20, or any $5?

I kind of already said this, but my thinking is that we could drastically diminish the government's role, thereby helping them to lower the borrowing that they are doing, and use our own $5 to stimulate the the economy. The multiplyer should work the same for my $5 bill as it does for a $5 food stamp, yes?

I am getting the distinct feeling that you love the food stamp math and food stamps.

Please read my post #24. You are obviously a follower of JMK and his sycophant JKG. Real economists like Friedman, Sowell, and Williams have thoroughly debunked these charlatans. I found this on another site, don't know who Raymond (parent) is, but he has it figured out. "Today's Lesson: The Food Stamp Program, administered by the Department of Agriculture, is actually proud of the fact it is distributing the greatest amount of Free Meals and Food Stamps ever!!!

Meanwhile, the National Park Service, administered by the US Department of the Interior, asks us to "Please do not Feed the Animals." Their stated reason for the policy is because the animals will grow dependent on handouts and will not learn to take care of themselves.

This ends Today's Lesson!!!

In economic terms, the only difference between civil bureaucrats and welfare recipients, is the food stamp folks aren't clogging the roads at rush hour.

Neither contribute to the economy. Remember 3rd grade math where you solved for an unknown by setting the equation to either 1 or 0? Do the same here, what would be the result if "everyone" worked for a government agency?

Here in paradise we are celebrating "Constitution Day, Friday is another holiday, guess what? Government offices are closed all week.

At present time, approximately 50% of the people in the USA pay no tax.

Imagine a wagon with 5 mules pulling it, and 5 mules sitting in the back of the wagon, getting a free ride.Every year, more leave the front and get in the back.The burden is getting heavier and heavier every year.How long before the ones doing the pulling say: "Wait a minute, I think I'll just get in the back, and I will vote for the candidate that can keep me there." (That has already happened, IMHO.)

Who will pull the wagon when all are sitting in the back?

The only way that wagon is going to move is downhill.

Is there an analogy here?

Before we devolve into an argument, just for the record, I'd like to say that I look at the government as one entity..........................and the rest of us, including government employees, as another.

The blame game is pointless and endless. All of us must insist that the people that we elect into office must represent all of us equally, regardless of what party is in power. I don't think it's right for democrat voters to feel abandoned if a republican is in office, nor do I feel it's right for republican voters to feel abandoned when a democrat is in office.

Just because they play dirty in Washington, doesn't mean that the rest of us have to lower ourselves to that level. Quite frankly, I think it's exactly what they want....................................all of us choosing a savior. Unfortunately, we are always only left with two choices, neither one really palatable.

I for one, believe that if given the freedom and opportunity, we are quite capable of both saving and sustaining ourselves. I don't need a savior in Washington.

Two centuries ago, a somewhat obscure Scotsman named Tytler made this profound observation: "A democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury. After that, the majority always votes for the candidate promising the most benefits with the result the democracy collapses because of the loose fiscal policy ensuing, always to be followed by a dictatorship, then a monarchy." - Elmer T. Peterson

I too have heard that quote.

The fallacy of socialism has been obvious to me since I was 18 years old. I grew up on a farm and we supplied ourselves or went without. Others have not had this perspective.

Collapse? No way to dodge it. I'm OK with that. I've taken care of myself before (and don't try to get MY food "stamps", I've got that covered too.

There is no simple math question here. The Conference Room is infested with linear thinkers. Kramarat invites the assemblage to consider the mathematics question as a problem in thermodynamics and the engineering minds have run with this concept.

The bonus to the economy ($4.20) - a ridiculously low-ball number - the real number being more like $42,000.00 - comes from an entirely different account. This is not a perpetual motion probelm - there is another source of energy.

This money comes from the salaries and expenses of the bureaucrats who adjudicate the worthiness of the many applications for a share of the million bucks.

These people (Federal, State and local) are charged with meeting, discussing, weighing, interviewing, assessing and, eventually, deciding the question of which of the many worthy organizations gets how much.

There are airfares, hotel bills, meal expenses, taxis, not to mention salaries and benefits - all to be accounted for.

$4.20 would not even cover the cost of the coffee and doughnuts.

Somehow I knew my simple question wasn't going to be so simple.

If we can keep from poking each others eyes out, it would be interesting to dissect, with links and sources, exactly how we arrived in the situation we find ourselves in.

Objectively, and in a way that engineers would approach any problem with a broken machine. Break it down and find the causes. If we can figure out why the machine is broken, we can work on ways to fix it.................................and then we can all, (in the US), email this thread to our elected representatives.

Get a grip - it's $4.20 per $5.00 food stamp!

WOW! 10000 to 1 return.

Everyone could just start receiving food stamps, and we could eat our way out of this hole we are in.

We currently have 46,713,332 food stamp recipients.Give each one about 325 dollars worth of food stamps, and sit back and wait.

We could even give some to Greece once we paid off our national debt.

WHEE! What a ride!

I want in on that.

Line forms at the rear!

Would you be interested in some ocean front property in Arizona?CHEEP?

http://www.usdebtclock.org/

I think Baffled was pointing out the incredible amount of money that is spent by the Washington big shots on where the food stamps go. Plane trips, hotels, meetings, dinner parties....................................all of the money that is spent in planning is attached to that little $5 food stamp. It all goes back into the economy.

Possible sarcasm.

Actually, the formula is probably accurate. Every time money is spent, it generates economic activity. If we bartered, there wouldn't be much economic activity generated. The real problem here is where the money comes from and how is it replaced. The formula doesn't factor in the taxes used to get this $5.00 in food stamps and the replacement of the taxes it took to get that $5.00 in food stamps. The recipient of the $5.00 in food stamps didn't do anything to get that $5.00 in food stamps except to be poor. The recipient doesn't pay any taxes to replace the taxes used to get the $5.00 in food stamps. So, if taxes aren't raised to pay for the food stamps, then we go deeper in debt. If the politicians would raise taxes to cover food stamp programs and the like, there wouldn't be that many programs. Of course, the politician would be a one term politician. And, the beat goes on, yes, the beat goes on.

Have some fun today,

PAPADOC

RMFR

I emailed my representative regarding this and actually received a response by mail.

He agrees with my assessment that this is but one of many things in government that is broken, and promises to work on this, as well as eliminating waste across the board.

We'll see.

long discussion !! wow ! but , the question is still unanswered !!