Lets say that the US Federal Reserve prints $5000 for every man, woman and child citizen. The government will handout the money to each person, on a specific date. What will the effects of this policy be?
Schools are labour camps.
Those who save the money will see their future value fall, and those who spend them will gain. So, it’s a tax on savings (the larger the sum given, the larger the tax). But besides this, it would do nothing else.
Show some balls. Make it a $5k/month salary for everyone. The effects? 0% unemployment; stimulus to the economy as tons of stuff is being made to be bought with the new money; jobs oozing out of every pore of the economy; these jobs paying salaries that can buy even more stuff which would demand even more jobs paying salaries that can buy even more stuff which would demand even more jobs paying salaries...; bulging tax revenues creating budget surpluses paying down deficits; inflation supporting housing prices making owners' and banks' balance sheets healthier; Bernanke hiring you as his right hand man, and Cheif Check Distributor. A win-win-win-win for everyone involved. A Keynesean nirvana.
Just don't let Krugman steal your splendid idea and write a NYT op-ed about it before you do. Or you could run for president with it, as 95% of voters are sure to support it. A no-brainer.
Z.