How Mass Immigration Destroys the Economy Over Time
There are two lobbies for mass immigration. The PC Left say it is good because of diversity. The banksta Right say it is good for the economy. This post only addresses the latter and explains why they're wrong.
- because it reduces the velocity of money and thus creates a hidden deflation
What's the standard banksta argument against people who say taxing the rich is the solution to a problem? They say that although those individuals are very rich there aren't that many of them so if you multiply their wealth by their numbers and then divide the total between the entire population it doesn't come to very much.
And they're right.
However that is the exact same reason why trickle-down economics doesn't work.
Velocity of Money
For any given size of money supply there is also a velocity - how fast and furious does that money supply circulate in the economy. The faster the money supply is circulating the greater the *effective size* of the money supply.
If the size of the money supply is M and the velocity of money is v then the *effective* money supply is vM. This means that if the velocity of money is going down then even if the size of the money supply is static or increasing the *effective* size of the money supply can be decreasing i.e. deflation.
So what does the velocity of money mean if you have a prosperous middle class with a lot of disposable income?
It means the electrician pays a surveyor to survey the house he plans to buy. The surveyor pays the auto-worker for a car. The auto-worker pays a dentist for some work on his teeth. The dentist pays the electrician for some work on his house etc.
The *same money* rapidly circulating around the economy increases the velocity of money and therefore the *effective size* of the money supply.
A large prosperous middle class has a *very high* velocity of money.
Numerically, say income can be spent three ways
- discretionary spending
- stored wealth
and say the velocity of money of each unit spent in each category is
- necessities 1
- discretionary spending 2
- stored wealth 0
then if you change the *proportions* of each category within your economy then you will change the overall velocity of money within the economy and that will change the effective money supply
What happens to the velocity of money if you have mass immigration?
Supply and demand leads to a decline in the value of labor which leads to a decline in the average income of the majority while increasing the average income of the rich. This has two effects:
1) the middle class' income is switched from high velocity discretionary spending to lower velocity necessities
2) the rich's discretionary spending may go up but there are few of them and they already have more than they need so at least some of the transferred income switches from high velocity discretionary spending among the middle class to low velocity stored wealth among the rich.
There is a caveat. You need to export something to pay for your imports and those exporting industries need to be competitive but that's it. If you have *enough* competitive exporters to cover your imports - either through better technology or cheap energy or any other way - then that is *all* you need.
Deliberately lowering average incomes and destroying the middle class on the basis of improving the economy has the opposite effect. It creates a hidden deflationary spiral through reducing the velocity of money.
There is a lot more to it e.g. the stagnation effect if mass immigration is used to transfer all productivity increases to the rich but that's the gist.
As an aside this also explains how usury creates economic stagnation through transferring discretionary spending into fixed loan repayments. When bankstas create debt saturation during a credit boom they turn high velocity discretionary spending into low velocity debt repayments and effectively create a hidden deflation through reducing the velocity of money.
(This is basically how Europe was kept stagnant for c. 1000 years after the fall of Rome.)
If you look at the huge productivity increases since 1965 and how it was all plundered by the rich through keeping average incomes down with mass immigration, and then imagine the prosperity effect if that added wealth had been passed on to the middle class as discretionary spending over the last fifty years instead, then America today would look like 1950s sci-fi.