[utunga]

I don't think its fair to describe that as a fundamental error. Rather, your explanation while OK as far as it goes is overly simplistic. Yes, its the real value not the currency that we are after, but you also have to take into account secondary effects like 'aggregate demand'. Perhaps that's an ideological bent of yours or perhaps just omission?

Either way, the process of creating 'real value' on both sides cannot get started in some cases because neither A nor B has any confidence (or capital to support their confidence) that the other side will have the currency to buy the real value they intend to create.

Sure, the currency itself just goes around in circles, and only acts as a catalyst to creation of the 'real value' we are after. But by injecting actual currency to one side or the other (through tax cuts or other means) we increase the aggregate demand and thus amount of flow of this currency in the economy as a whole. This could then (hopefully) increase the confidence of A and B that the other will buy their real value and thus is a way to restart the circular flows of productivity that ultimately creates jobs (and real value).

His talk sort of just assumes you are aware of all the above. His actual point is that by giving tax cuts to the wealthy instead of workers a greater percentage of the stimulus / tax cut stays in bank accounts and thus the effect on aggregate demand is less.

[WalterBright]

Money in bank accounts is not idle. It is loaned out - and nobody is going to borrow unless they have plans to spend it.

(As eloquently put by Jimmy Stewart in "It's a Wonderful Life".)

[Peaker]

Value can be measured in currency. When the target audience of some product has no currency, you could say that economically it has no value. Whereas if you ask these penniless people, they will tell you that it has enormous value to them.

Therefore, placing currency in the hands of the masses can and will drive value creation, because it will assign economic value to what brings value to the masses.

[arnoooooo]

It really is much more complicated than that. Money in bank accounts give the banks the right to create a proportional amount of money, under the assumption that value will be created to match that amount.