I understand that it is better for individuals to have money to spend in the market, but I don’t understand how the government get the stimulus money. If people are making less and paying less in taxes (plus tax cuts), isn’t the government low on cash too?
Bonus: how insulated are government jobs during economic turns?
In: Economics
Imagine you are hungry, like really really hungry and your parents are too. Because they have just lost their job. So hungry that only thing you can do is lay down and be hungry. Your parents cant go to work, you can’t go to school. Too hungry to do anything. Your parents write out to your president (Trump) that they cannot work anymore and need help so that they can, so Trump looks into his closet and finds a food making machine that has the potential for making infinite food (The central bank). *Just as long as you give similar amount of food back at some point* (and the interest rate), you can have infinite food. (But there is a warning: If you use this too much there will be no food for anyone anymore)
The reason why the warning is there is because the machine is actually a time machine and it takes the food from the good crops of future. As a loan. And if you don’t replace those crops in time, then the future will have no food. Even with good crops.
So now your parents and you have food and can work harder, but the future is dimmer for the time period the food is transferred from. And if more food than needed is transferred from the future then the future people will need to use the machine again and again until there is no future crops to go to.
A rumored tale also tells about a machine that is able to save surplus of food of today for future, that they used to use for situations like this. But that machine has long time since been lost.
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