Good video, although I suspect that the material could have been presented in less time.

The placebo effect boils down to the psychology of the subject short-circuiting the connection between stimulus and response. A "fake" stimulus is introduced, the subject is told that he/she may expect a certain response, and magically, the response occurs.

This reminds me of an experiment conducted in the 1920s designed to see whether lighting in a manufacturing plant would improve the productivity of the workers. Increase the brightness, productivity goes up. Temporarily. Decrease the brightness, productivity goes up. Temporarily. What's going on here? Scientists refer to this result as the observer effect, or Hawthorne effect. See https://steemit.com/dtube/@davidpakman/dztm9yff. We believe that the office lighting had nothing to do with worker productivity. Rather, it was all the attention that the workers were getting during the experiments, and the psychological expectations that arose from that.

The same idea applies in the world of economics. Ever hear the Federal Reserve talk about "inflationary expectations"? Sometimes the expectations of the population can have more influence on the economy than actual changes in GDP or the size of the money supply.

So these concepts are relevant today when we consider the Trump tax scheme. It's not directly tied to stimulating the economy. If we were giving large sums of money to the lower and middle classes, we would expect them to buy things immediately with the money: paying rents/mortgages, buying new clothes for the kids, paying off debts, spending money on home repairs/improvements, buying cars. All of these would have a multiplier effect, as sellers of these products/services benefit from the increased economic activity.

But with the Trump tax scheme, 53% of the cut goes to the top 1%, and 30% of the cut goes to the top 0.1% (those with expanded cash income of $3.4 million or more). Put another way, the top 1% would see an average $129,030 tax cut and the top 0.1% would see an average of $722,510, while those in the middle quintile would see an average of $660 per family. The ultra wealthy have no real need for the money. Their current cash flow is more than ample to suit their spending needs, by definition, otherwise they would not have such large pools of money earning passive income (e.g., stock investments). Thus, the question arises whether we will see a "placebo effect" (or observer effect or psychological expectation) play some role.

The same goes for the Trumpian reduction of the corporate tax rate from 35% to 21%. If corporate treasuries were already so flush with cash that they've been buying back their own stock for the last several years, rather than investing in capital improvements or hiring more workers, one wonders what effect, if any, the tax cut will have on the broader economy (other than in giving cash to already wealthy corporate executives).