Immigration Reduces the Velocity of Money

As some of you know, I will sometimes write things that will surprise you. Consider this post as one of those WTF posts. Today I will talk about the negative effects of immigration on the economy- specifically the deleterious effects of immigration on the velocity of money and its consequences.

While few appreciate it, the high velocity of money is probably the main reason behind ‘things working so much better’ in developed countries- at least for now. Let me explain..

Since the principal way for most people to make enough money to live nicely in today’s world is through a job of some sort- it follows that a system which creates more well-paid jobs per unit of money changing hands is more desirable than one that is less efficient at creating jobs for the same transaction. Furthermore, an increase in the number of well-paid jobs creates even more well-paid jobs as people spend their disposable income.

Large-scale immigration screws up this balance on two levels.

1. Imagine your average person who was born and lives in a developed country. Chances are that such a person spends almost all the money they earn on living well. So a person who earns 100 units of money spends somewhere between 90-105 units. Now imagine your average replacement immigrant who likely makes 60-80 units because of.. who cares. Anyway, this person often comes from an impoverished country or background and will save a larger fraction of their income, say 20 units, by living very cheaply. But how does this affect the larger economy?

Simply put, the immigrant will spend only 50-60% of what a native-born will. While that might appear frugal and emulation-worth, it kills all those well-paid jobs which existed because of the extra 40-50 units spent by the native-born person. Moreover the very presence and competition from the immigrant reduces the native-born persons earnings from 100 to, say 80, units.

Now you might wonder why two people spending 60-80 units are inferior to one person spending 100 units. The answer lies in the job-creating potential of what they spend their income on. Essentials such as housing, food, utilities, healthcare etc create far fewer well-paid jobs per unit of money spent. In contrast, so-called frivolities such as restaurants, bars, shops and services create many more jobs per unit of money spent.

Immigrants, directly and indirectly, shift money from sectors that create more well-paid to decent jobs to those that create fewer jobs and are ridden with rent-seeking and inefficiencies.

There is however yet another way for immigration to reduce the velocity of money.

2. What I have mentioned until now can occur in growing as well as stagnant societies. While developed countries grew a lot after WW2 until the mid to late 1990s, that is no longer the case. Today developed countries are either barely growing or have become stagnant. They have also become older..

This brings us to the question- How does immigration affect a society where an increasing number of older people derive their income from public income schemes, pensions and utilize an ever-increasing amount of government healthcare?

All governments today derive their income from three sources- taxes, loans and royalties with the bulk coming from the first two. But how can you tax a rapidly increasing number of people who barely make enough to make ends meet? and how can you get low-interest loans from banksters and other shysters if your economy cannot grow quickly?

Did I mention that any “austerity” measures cause a further fall in revenue, growth and the velocity of money.

What do you think? Comments?

  1. February 7, 2012 at 8:48 pm | #1

    hahahaha,

    this is too funny, does this mean you are advocating the Diaboli student visa where only guys who promise to spend a large portion of their income on prostitutes are allowed in. That way the money flows back to lazy white nationalists who get a kickback from their moms and sisters whom you pay so well….

    yeah, I may be an @$$hole but I’m not your @$$hole….

  2. February 7, 2012 at 8:52 pm | #2

    and, um, yeah, this seems similar to the trickle down effect that Warren buffet said didn’t work…

    I guess this is the trickle out effect, kind of like when you have one to many beers and pee on yourself in your waterbed and aren’t sure if it sprung a leak or not…

    hehehe

    This is known as the money multiplier effect (horizontal), something that is known to work- unlike trickle down (vertical) bullshit.

    • February 7, 2012 at 9:05 pm | #3

      From the sexxxy, sleazy wiki:

      http://en.wikipedia.org/wiki/Money_multiplier

      “In equations, writing M for commercial bank money (loans), R for reserves (central bank money), and RR for the reserve ratio, the reserve ratio requirement is that R/M \geq RR; the fraction of reserves must be at least the reserve ratio. Taking the reciprocal, M/R \leq 1/RR, which yields M \leq R \times (1/RR), meaning that commercial bank money is at most reserves times (1 / RR), the latter being the multiplier.”

      wait…wha????

      I is a produkt of thye amerikkkan educashun sistemn….
      ;)

      so are you saying that peeps with well paid jobs put something into the system but they need more people with well paying jobs to putt more into the system ad infinum or the system breaks down?

      If that’s the f*ckin’ case, tell all those repubtards who talk about job creation but really mean McWalmart jobs are shooting the country in the foot bigtime…..
      —-

      Try this one.

      http://en.wikipedia.org/wiki/Money_multiplier#Example

      Essentially money that is spent gets recycled and amplifies itself through banks and people- unlike money that is not spent.

      • February 7, 2012 at 9:21 pm | #4

        so, this is not exactly what GWB meant when he said the way to improve the economy was for consumers to spend more after 9/11-this is somehow related to the housing bubble and maybe the upcoming student loan bubble or am I WAAAAAY off here….

  3. February 7, 2012 at 8:53 pm | #5

    and also how the f*ck do you spend 105 units of money if you only earn 100 unless you use credit cards?

    Yep.. either that or loans.

    • February 7, 2012 at 9:19 pm | #6

      so, am I better off living below my means while my “peers” get into debt with new cars an bigger places to live or should i just party my @$$ off and declare BK (now harder to do)?

      • P Ray
        February 8, 2012 at 11:12 am | #7

        Only if you don’t have a student loan.
        Because those won’t be written off even if you are bankrupt.
        And when a man marries,
        he assumes the debts of his wife.
        Better hope she can work with her degree.
        This is why real equality is so important.
        Otherwise all you end up with are bubbleheaded degreed bimbos (they can’t all be supermodels bringing in the big bucks) who look for a rich man to finance them

        Nice writing, advocatus. I think you should seriously consider putting all your articles into a book … or make sure to backup the site.

  4. Matt Strictland
    February 8, 2012 at 11:36 am | #8

    I can’t disagree with a word AD. save that people should not spend more than 90% of income nor save much more either. This way any blips in the income stream can be shrugged off and useful non inflationary capital is in the stream for investment. And no I do not know how that will work with population aging and the end of the Ponzi economy. I still do not think its ill advised.

    In my opinion ,small numbers of highly skilled immigrants in the STEM fields, not enough to crowd out native educational participation, especially those that do not remit income are a net asset. A few guys is a good thing, an H1B program not so much.

    In some sense they are a strategic one as they brain drain other societies of some intellectual capital.

    So yeah, if all our immigrants were tested objectively and required to be as smart, disciplined , well paid (presumably) and hopefully willing to spend as our host here, the economy would actually benefit.

    And yes some of these would be non White, this is not an issue as the numbers of such are quite self limiting. Of the non Europeans they’d mostly be Indian of high caste (the other other White race) with some Persians (also more or less White) Hispanics (also mostly White) and a manageable number of Semites (or maybe not) and Asians. Assuming that had been policy (along with border control) instead of the mess we got, the US would be a bit more diverse on the high end and less on the low end which would be a net plus.

    Ben Matt I thought you were a race hater ? Nah. Its about numbers, at no point in its
    history has America every been 100% White and even at peak America it was only around 90%. We can easily handle15%, this leaves lots of 100% Lily White areas for people to live.

    Heck has a magic comet vaporized all the truly dumb and violent Blacks and similar Mestizos (thus no guilt) , the US would actually be a the multi-cult paradise its proponents want. The various non European Whites, Semites and Asians along with the others (mostly harmless Amerinds, Smart Blacks and Mestizos) would be maybe 10%-15% of the population and would provide useful hormesis.

    And before it gets sidetracked, yes smart greed-heads do in reality cause more social damage than thugs. However the way people are wired means the thugs cause more fear and cause more disruption up front. Being looted is a threat but its not a “Tiger in my neighborhood threat” of the sort humans are wired for.

  5. Nestorius
    February 8, 2012 at 2:08 pm | #9

    Not to forget that immigrants channel most of their money to their original country.

  6. Kaz
    February 8, 2012 at 7:07 pm | #10

    Our economy was inflated off fake numbers for a while, it about time that it shrank to ‘real’ levels. No immigrant spending bs about it, come on AD you know better than this. There are better reasons why immigrants may be bad for an economy.

    @Nestorius

    MOST of their money? Haha no way, certainly a portion, but not most.

    • Nestorius
      February 9, 2012 at 2:26 am | #11

      I had in mind immigrants who transfer money outside immigration country. Certain poorer countries depend on money transfered from immigration countries.

  7. February 8, 2012 at 7:32 pm | #12

    haha, it’s like Diablo has to write about the evillle banksters…

    then throw a few bones to his alt right boi’s by writing about how bad teh immigrants are…

    that being said, I think the banksters did waaaaay more damage and if you can’t compete in the labor market with someone who works below minimum wage and can barely speak English, then maybe you are the bottom of the barrel in your own country (Hiya Neo Nazi/White Nationalists…)

  8. Conquistador
    February 8, 2012 at 11:40 pm | #13

    “Nice writing, advocatus. I think you should seriously consider putting all your articles into a book … or make sure to backup the site.” – P Ray

    Agreed. Delusion Damage just shut down his blog recently. Luckily I bought his book (print edition) so his ideas will always be accessible.

    Roissy should have done the same a while ago. Put all his best blog entries in e-book and print format and then walked off into the sunset. Cuz now his blog has gone down in quality considerably.

  9. Conquistador
    February 8, 2012 at 11:47 pm | #14

    @ stonerwithaboner

    Aren’t you a black and mestizo mut?

    Mass immigration is doing enormous damage. Bankers for all their shortcomings don’t make neighborhoods unsafe, drive down property values (well recently they did but not by their mere presence) or radically change the demographic profile. Latin America is a 3rd world shit hole with a few nice white enclaves and that’s beginning to look like our future too.

    • February 9, 2012 at 7:58 am | #15

      “Aren’t you a black and mestizo mut? ”

      Your sister had much more complementary words about my tan and, uh, endowment….

      I prefer “victim of miscegnation.”

      Go give a blowjob to a 12 guage….

  10. Matt Strictland
    February 9, 2012 at 12:40 am | #16

    stonerwithaboner :
    haha, it’s like Diablo has to write about the evillle banksters…
    then throw a few bones to his alt right boi’s by writing about how bad teh immigrants are…
    that being said, I think the banksters did waaaaay more damage and if you can’t compete in the labor market with someone who works below minimum wage and can barely speak English, then maybe you are the bottom of the barrel in your own country (Hiya Neo Nazi/White Nationalists…)

    Todays WN’s are mostly about self improvement and building a better White people ans getting a land for the same. Sure the occasional old school violent angry skinhead is still out there but those guys are mostly gone.

    Also you last bit is BS frankly, no one can compete with desperate people or automation or slave labor nor should they have too in their own country just to satisfy some greedy psychopath or guilty liberal scum.

    • February 9, 2012 at 7:56 am | #17

      I know the government has given us all a raw fuckin’ deal….

      still had to throw some shaming language out there….

      yeah, you’ve seen the f*cks atIMF who’ve called me a halfbreed victim of miscegnation-that was for them…..

      Ironically, there are articles in the tech sector saying that 50% of all jobs will dissappear due to automation….

      It’s already starting when you can use an automated checkout….

      “Sure the occasional old school violent angry skinhead is still out there but those guys are mostly gone. ”

      Had a few real Life encounters with those vile peices of sh*t….

      • Matt Strictland
        February 9, 2012 at 10:47 am | #18

        I have no use for those guys either. I am White and I keep a wide berth from them.

        Also why in the hell does anyone hold someone at fault for accidents of their birth?

        While I am not all about race mixing, I am not a Baha’i after all and it violates “tribal” custom (not WN, my perfectly tolerant WASP ones actually ) still the person who is born of it holds no fault and they are not a victim of anything.

        To my way of thinking, racism ought to be about realistic assessment and strengthening ones own cultural identity, not hating on other people who are not messing with you.

        Its not necessary to screw with people who aren’t doing anything to you just because they aren’t you. That kind of stupid stuff leads to needless war and costs lives of your own people.

        Its also dumb to overly broadly assume all members of a given race are X. There are differences in impulse control and intelligence that may be genetic but people of all races vary.

        I’ll probably get shunned by the WN crowd for this but I don’t see any good reason to hate some of my friends who are a bit of this and a bit of that Asian, Black, Mestizo, Jew whatever just because they aren’t White .

        I can try to build a stronger more uniform tribe and admit that others are perfectly good people and enjoy their company without any issues. And there is no particular conflict with saying “many Blacks and Mestizos and some Asians are a poor fit for the US I want.” either

        Just a last point, the Anti Semitic issue. I am going to off topic and hijack AD’s blog for a second …

        The whole Jew Blood religion is annoying to me. I’ve met many Jews, many half breeds and I cannot tell many of the Ashkenazim from Whites without a DNA test. The fricking Nazis couldn’t and they perfected the idea.

        In fact even they had enough sense to realize that some of them were functionally German (c.f Certificate of German Blood) and they wanted to exterminate all of them!

        A classic example Israeli model Bar Refaeli. Does she look like a swarthy Semite to anyone?

        here is a teen pic

        http://en.wikipedia.org/wiki/File:Bar_Refaeli_age_18.jpg

        She looks like a Jillion White Girls I’ve seen (well better but you know what I mean) other than maybe the almond eyes.

        Frankly I prefer Jared Taylor on this approach, Jews are other Whites done…

        However I tend to agree with the WN types who say that some Jews are trying to influence Western culture in ways that we regard as harmful and that a disproportionate number of them work in the finance sector in negative ways.

        Also many of the Jews long before I had any animosity (I had more than a hint of philosemitism back than) I’ve met have treated me or my gentile friends in a shabby matter, far worse than people who were clearly not White

        This is awkward as many White Nationalists myself included would be fine with Jews but apparently the Jews seems to have what Keivsky calls a conflict of Interest

        Unfortunately I tend to agree and I honestly wish that crud would stop.

        Frankly I wish racism would stop but thats not doable as mixed societies almost always break down into bigotry of some kind. Tracking victims or victimizers is futile. Everyone is both at one time or other.

        To keep conflict down, keep to ones own kind and do not meddle.

        Heck if there was race tolerant Liberal homeland, I guess that would work too.

        I guess Kipling go this right as he did many things

        OH, East is East, and West is West, and never the twain shall meet,
        Till Earth and Sky stand presently at God’s great Judgment Seat;

  1. April 17, 2012 at 5:00 pm | #1

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