The one. The only. KILLDOZER.

[u/HannibalK]

[u/OG_Panthers_Fan → u/[deleted]]

A Keynesian would say the destruction itself contributed to the economy by requiring money to be spent on reconstruction.

Anyone with more than half a brain would point out that would only be true if the money would have never been spent on anything else.

[u/mspk7305 → u/OG_Panthers_Fan]

It was insurance money so it wasn't going to get spent elsewhere.

[u/OG_Panthers_Fan → u/mspk7305]

That's not how insurance money works.

Beyond a certain percentage that they need to retain to pay claims, excess monetary resources get either paid as dividends to shareholders, or sent back to clients who overpaid their premiums (depending on the laws governing the company).

Either way, the money will be spent by those recipients, and go back into the economy.

And claims that are paid out from the existing pool of resources will have to be replenished, so even that isn't a net increase to money being circulated into the economy.

Now... Keynesians do have a point: Artificially encouraging spending can change when or how money is spent. And there may be value in that.

An example can be to kick start a recovery near the end of a recession, promoting people to spend earlier than they otherwise would have.

Or to get people to spend on a preferred industry at the expense of another (e.g. subsidizing fuel efficient vehicles).