Relative worth of investment versus spending for the economy
I don't think that there's a specific  number or index that gives you what you're looking for. I think the closest thing to it would be the velocity of money, which is a measure of how often money changes hands.  Also, for what it's worth, I believe that this concept is controversial in some circles. I believe you're looking for some sort of formula that will determine how changes in savings, investing, and spending will affect economic growth.  If such a formula existed (and worked) then central planning would work since a couple of people could pull some levers to encourage more savings, or more investing, or more spending - depending on what was needed at that particular time.  Unfortunately, no magic formula exists and so no person has enough knowledge to determine what the proper amount of savings, investing, or spending should be at a given time. I found this resource particular helpful in describing the interactions between savings, consumption, and investing.
Transfer of Money from you to Your Mother is Tax Free. i.e. This will not be considered as income for your mother as there is NO work done. This would be considered as Gift and would fall under Gift Tax. As per Gift Tax you can give unlimited amounts to close relative. Mother is considered as close relative. The tax rule is same whichever option you follow. You would need to maintain proper paperwork, should there be any query from Income Tax department. Any interest / income your mother generates on this will be her taxable income. You have also mentioned that you are repaying some loan for your relative, again the paper work should be very clear when your mother is transfering the money to your relative. The interest you pay back maybe taxable to your relative depending on paperwork. Edit: Elobrate OP's edit to question From your point of view, once you have given the funds to your Mother and call it gift; it ends. What your mother does with the money invests, spends, etc is not your liability. However if your mother is tranferring money to person's who are not defined as relatives under Gift Law or the interest your relatives get are all taxable events to them. "Quantitative Easing Explained: http://www.npr.org/blogs/money/2010/10/07/130408926/quantitative-easing-explained The short of it is that you're right; the Fed (or another country's Central Bank) is basically creating a large amount of new money, which it then injects into the economy by buying government and institutional debt. This is, in fact, one of the main jobs of the central bank for a currency; to manage the money supply, which in most fiat systems involves slowly increasing the amount of money to keep the economy growing (if there isn't enough money moving around in the economy it's reflected in a slowdown in GDP growth), while controlling inflation (the devaluation of a unit of currency with respect to most or all things that unit will buy including other currencies). Inflation's primary cause is defined quite simply as ""too many dollars chasing too few goods"". When demand is low for cash (because you have a lot of it) while demand for goods is high, the suppliers of those goods will increase their price for the goods (because people are willing to pay that higher price) and will also produce more. With quantitative easing, the central bank is increasing the money supply by several percentage points of GDP, much higher than is normally needed. This normally would cause the two things you mentioned: Inflation - inflation's primary cause is ""too many dollars chasing too few goods""; when money is easy to get and various types of goods and services are not, people ""bid up"" the price on these things to get them (this usually happens when sellers see high demand for a product and increase the price to take advantage and to prevent a shortage). This often happens across the board in a situation like this, but there are certain key drivers that can cause other prices to increase (things like the price of oil, which affects transportation costs and thus the price to have anything shipped anywhere, whether it be the raw materials you need or the finished product you're selling). With the injection of so much money into the economy, rampant inflation would normally be the result. However, there are other variables at play in this particular situation. Chief among them is that no matter how much cash is in the economy, most of it is being sat on, in the form of cash or other ""safe havens"" like durable commodities (gold) and T-debt. So, most of the money the Fed is injecting into the economy is not chasing goods; it's repaying debt, replenishing savings and generally being hoarded by consumers and institutions as a hedge against the poor economy. In addition, despite how many dollars are in the economy right now, those dollars are in high demand all around the world to buy Treasury debt (one of the biggest safe havens in the global market right now, so much so that buying T-debt is considered ""saving""). This is why the yields on Treasury bonds and notes are at historic lows; it's bad everywhere, and U.S. Government debt is one of the surest things in the world market, especially now that Euro-bonds have become suspect. Currency Devaluation - This is basically specialized inflation; when there are more dollars in the market than people want to have in order to use to buy our goods and services, demand for our currency (the medium of trade for our goods and services) drops, and it takes fewer Euros, Yen or Yuan to buy a dollar. This can happen even if demand for our dollars inside our own borders is high, and is generally a function of our trade situation; if we're buying more from other countries than they are from us, then our dollars are flooding the currency exchange markets and thus become cheaper because they're easy to get. Again, there are other variables at play here that keep our currency strong. First off, again, it's bad everywhere; nobody's buying anything from anyone (relatively speaking) and so the relative trade deficits aren't moving much. In addition, devaluation without inflation is self-stablizing; if currency devalues but inflation is low, the cheaper currency makes the things that currency can buy cheaper, which encourages people to buy them. At the same time, the more expensive foreign currency increases the cost in dollars of foreign-made goods. All of this can be beneficial from a money policy standpoint; devaluation makes American goods cheaper to Americans and to foreign consumers alike than foreign goods, and so a policy that puts downward pressure on the dollar but doesn't make inflation a risk can help American manufacturing and other producer businesses. China knows this just as well as we do, and for decades has been artificially fixing the exchange rate of the Renmin B (Yuan) lower than its true value against the dollar, meaning that no matter how cheap American goods get on the world market, Chinese goods are still cheaper, because by definition the Yuan has greater purchasing power for the same cost in dollars. In addition, dollars aren't only used to buy American-made goods and services. The U.S. has positioned its currency over the years to be an international medium of trade for several key commodities (like oil), and the primary currency for global lenders like the IMF and the World Bank. That means that dollars become necessary to buy these things, and are received from and must be repaid to these institutions, and thus the dollar has a built-in demand pretty much regardless of our trade deficits.  On top of all that, a lot of countries base their own currencies on our dollar, by basically buying dollars (using other valuable media like gold or oil) and then holding that cash in their own central banks as the store of value backing their own paper money. This is called a ""dollar board"". Their money becomes worth a particular fraction of a dollar by definition, and that relationship is very precisely controllable; with 10 billion dollars in the vault, and 20 billion Kabukis issued from Kabukistan's central bank, a Kabuki is worth $.50. Print an additional 20 billion Kabuki and the value of one Kabuki decreases to $.25; buy an additional 10 billion dollars and the Kabuki's value increases again to $.50. Quite a few countries do this, mostly in South America, again creating a built-in demand for U.S. dollars and also tying the U.S. dollar to the value of the exports of that country. If Kabukistan's goods become highly demanded by Europe, and its currency increases relative to the dollar, then the U.S. dollar gets a boost because by definition it is worth an exact, fixed number of Kabukis (and also because a country with a dollar board typically has no problem accepting dollars as payment and then printing Kabukis to maintain the exchange rate)" Youre assuming that GDP shows the amount of wealth created and is an indicator of the standard of living, but it is not. Govt spending adds to gdp but takes away from the productive capabiliies of the private sector, which is the part of the economy that is making things that people want and need. The govt can spend 1 trillion on building a monument to obama, and that would increase gdp by 1 trillion, but no wealth is created and the govt jut shift a trillion of tax revenues to the workers who built the monument. If a company spends 1 trillion building building some new gadget, then the people who spend money to buy i have something to show for it and the workers have their wages as well. So now the company makes back 1.2 trillion and the consumers have their gadget, ie real wealth has been created.   The wealthy may be sittin on hoards of cash, but its not just sitting under their mattress. Its spread out between investments and savings. Savings is neccessary to build up productive capabilities. The money the rich have sitting in banks is being used to help other businesses grow, not just collecting dust. I wish it were as simple as giving every poor person 10 grand and watching the economy take off, remember when bush gave everyone a 1000 tax refund? It sure was fun blowing that on a ps3, i cant argue with that. But prosperity can not be printed, it must be earned through hard work and productive activity. What we need is not monetary stimulus, we need the govt to stop destimulating the private sector with burdensome regulations and taxes. We need lower barriers to entry so we maximize competition in every industry. We need the govt spending less, and pushing more workers into the private sector, making things that american can get some utility from. Its not going to be a smooth ride getting there, there will be lots of lay offs in the short run as the economy restructures. But if the govt got out of the way and let the free market prosper, our society would be far better off in the future First, currencies are not an investment; they are a medium of exchange; that is, you use currency to buy goods and services and/or investments. The goods and services you intend to buy in your retirement are presumably going to be bought in your country; to buy these you will need your country's currency. The investments you intend to buy now require the currency of whatever country they are located in. If you want to buy shares in Microsoft you need USD; if you want shares in BHP-Billiton you need AUD or GBP (It is traded on two exchanges), if you want property in Kuwait you need KWD and if you want bonds in your country you need IDR. When you sell these later to buy the goods and services you were saving for you need to convert from whatever currency you get for selling them into whatever currency you need to buy. When you invest you are taking on risk for which you expect to be compensated for - the higher the risk you take the better the returns had better be because there is always the chance that they will be negative, right down to losing it all if you are unlucky. There is no 100% safe investment; if you want to make sure you get full value for your money spend it all right now! If you invest overseas then, in addition to all the other investment risks, you are adding currency risk as well. That is, the risk that when you redeem your investments the overseas currency will have fallen relative you your currency. One of the best ways of mitigating risk is diversification; which allows the same return at a lower risk (or a higher return at the same risk). A pure equity portfolio is not diversified across asset classes (hopefully it is diversified across the equities). Equities are a high risk-high yield class; particularly in a developing economy like Indonesia. If you are very young with a decades long investment horizon this may be OK but even then, a diversified portfolio will probably offer better rewards at the same risk. Diversifying into local cash, bonds and property with a little foreign equities, bonds and property will serve you better than worrying about the strength of the IDR. Oh, and pay a professional for some real advice rather than listening to strangers on the internet. "This is the best tl;dr I could make, [original](https://www.brookings.edu/wp-content/uploads/2017/06/es_20170626_whengrowthisnotenough.pdf) reduced by 97%. (I'm a bot) ***** &gt; The Reagan revolution heralded a more constrained approach to economic policy, aimed primarily at fostering aggregate economic growth by empowering the private sector.  &gt; The distinction between the two types of policies should be in front of mind, including the recognition that a reduction in rules that protect incumbent workers, for example, may need to be balanced with an increase, not a decrease, in active policies to support necessary adjustments in the labor market.  &gt; If the resources released by economic change are to be effectively redeployed; if the benefits of growth are to be widely shared; and if economic policy is to be widely perceived as both successful in its own terms and politically legitimate, then making those interventions effective should be a top priority for policymakers.   ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6jyepz/fantastic_ben_bernanke_speech_on_the_populist/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ ""Version 1.65, ~154447 tl;drs so far."") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr ""PM's and comments are monitored, constructive feedback is welcome."") | *Top* *keywords*: **policy**^#1 **economic**^#2 **American**^#3 **more**^#4 **United**^#5" My point was that we have the safest debt for **right now**. I agree that we can still afford to spend money to fix the economy. The problem is that the spending we have been doing so far isn't doing a whole lot considering what we are investing. We have spent trillions and our GDP growth rate is two thirds what it was over the last 70 years. If we were still at the beginning of the recovery that could be acceptable. But it's been three and a half years now. We are going to need to start getting some bang for our buck to turn this around.  If we are still doing the same thing two years from now, investors may not have faith in the safety of the United States anymore. They will realize we have taken on 30 years of deficits and then taken trillions more to save the economy. If we are still stagnant, the world will start to question how great our economy really is and whether we even deserve the world reserve currency.  So yes I agree that we currently have the safest debt in the world and can try to save our economy through deficit spending. I did off on a tangent, but I think it was a necessary point. We need to make sure that the deficit spending we do from here on in actually creates real value for the economy and gets real GDP growth.   The reason I am sick of the argument is that many people seem to have this idea that the U.S. will always have the reserve currency and the world will always consider it to be the safest debt. We can keep going this way for now, but if we don't back up that claim then sooner or later they won't buy it anymore. I agree with the government spending but we need to spend in areas that are going to generate real GDP growth rather than randomly building projects and hoping for the best.  edit:so in other words, I think I agree with you. I just want to make sure people understand how perilous things can get in the future and we don't all buy into a sense of entitlement that we can spend whatever we want forever. "When I look at debt I try to think of myself as a corporation.  In life, you have a series of projects that you can undertake which may yield a positive net present value (for simplicity, let's define positive net present value as a project that yields more benefit than its cost). Let's say that one of the projects that you have is to build a factory to make clothing.  The factory will cost 1 million dollars and will generate revenue of 1.5 million dollars over the next year, afterwhich it wears out. Although you have the knowledge to build this wonderful factory, you don't have a million bucks laying around, so instead, you go borrow it from the bank.  The bank charges you 10% interest on the loan, which means that at the end of the year, the project has yielded a return of 400k. This is an extremely simplified example of what you call ""good"" debt.  It is good if you are taking the debt and purchasing something with a positive value. In reality, this should be how people should approach all purchases, even if they are with cash.  Everything that you buy is an investment in yourself - even entertainment and luxury items all could be seen as an investment in your happiness and relaxation.  If more people approached their finances in this way, people would have much more money to spend, William" But they were spending on things that people didnt need, ie tanks, guns, bombs. Not things a consumer would want or could use. This is the difference between productive work and the hole diggers I was illustrating before. Govt spending for the sake of spending does not create wealth, it on redirects capital from more productive avenues. Sure the govt needs to spend on war items if there's a legitimate threat of us being attacked. But govt spending should always be kept to a minimum so that the private sector can achieve the highest level of productivity with the scarce resources we have.