pretty scary huh? But it is a good news bad news thing... The good news, we won't be on the hook for it...The bad news, our kids and grandkids will, and they will hate us for it.
To the man who said, "I wish the average person could spend--" yes, indeed. But the average person cannot spend money in conditions like these, when the credit crunch brought about by insane conservative policies caused mass firings and a near-depression. In that case, the federal government is the spender of last resort. This money was brought into existence by the Fed, was largely repaid by the banks at a profit, and now is available for re-spending. If we didn't need to stimulate further activity so that we could lower unemployment from 10%, it would be a good thing to do to pay off debt. (Kind of funny, given the ridicule that was unleashed on Gore and Clinton for suggesting that their surplus be spent decreasing the debt.) But it's not time yet. The market is up, but investment and hiring is not. If that situation is left to founder, there will be another dip, because we have to build up employment to build up demand. There's just no question that you're wrong. If the federal government had gone to low deficits and low taxes, there would be a full-bore depression right now. If we don't stimulate now, there will be another dip on this very deep recession. And if it works, most of the added debt will be paid off when our output rises. At the top of the curve, in a couple of years, we'll have the capacity to repay what we need now. It really gets boring to hear all this crap from conservative economists and politicians, whose sage advice got us stuck in this mess in the first place.
Peter Schiff should be the financial adviser to the white house. If everyone would have listened to people like him to begin with we wouldn't be in this mess!
As long as that increased spending leads to increased income, and therefore increased tax collection going forward the trick works. The danger here is blindly flinging money at the problem without understanding it's potential for future returns.
id suggest reading into the laffer curve, however since digg is not tolerant on non socialist/communist ideals i expect to be dugg down, and insulted.Laffer curve suggests that government revenue increases as tax rates decrease (to a certain point then fall off...hence the curve)This is because as you approach a fair tax rate, people stop hording cash offshore and using tax loopholes.Look into it, its very interesting and backed up with real data.
Reading up on it now, and it seems very logical. I don't necessarily think it's exclusive of the keynsian monitary policy I mentioned above either, as it could probably be worked into both Rep/Dem models of removing liquidity from the money supply. Consider a bubble: a great time to both pay down the deficit and attempt to reduce risk (like what happened with US housing). Obtaining the maximum amount of revenue from taxes would be the best way to stymie the economy's excessive growth, and that Laffer curve seems to be spot on how to do it.
You're right, but people will still go on believing what they want to believe. It's going to take a major economic collapse in order for people to start accepting the truth that we can't sit back comfortably while the government fixes all of our problems. When that time comes I think we'll either change our ways and enter an age of prosperity or enter a very dark age where Alex Jones' ideas become a reality. It depends on whether or not they can still convince us that it was all the free market's fault and we didn't have enough government intervention during this time period. We'll see.
If businesses and individuals who have small businesses are allowed to keep money, they will use it to invest in the growth of their company if they are not threatened of future tax increases. Even in an economic downturn, they know that things will change at some point. They will also spend the money efficiently because they have to in order to keep in business. Jobs are created and more money is made in order to be taxed.If the government is the one to spend the money, they are spending the people's money so it is like taking water from the deep end and putting it in the shallow end. It does not increase the GDP. Also any jobs that are created are ones that need to be paid for in the future (adding to the budget) or discontinued after a period of time. Look at how the stimulus has been spent so far to see what happened with that money. It has not been used efficiently. The jobs created were at an astronomical price per job. They don't have shareholders or the need to keep in the black to stay in business, so they don't keep a tight watch on the funds. What has been spent was mostly to repay political debts and not to truly try to stimulate the economy.
waiting2awakeDec 9, 2009
pretty scary huh? But it is a good news bad news thing... The good news, we won't be on the hook for it...The bad news, our kids and grandkids will, and they will hate us for it.
swift2Dec 9, 2009
To the man who said, "I wish the average person could spend--" yes, indeed. But the average person cannot spend money in conditions like these, when the credit crunch brought about by insane conservative policies caused mass firings and a near-depression. In that case, the federal government is the spender of last resort. This money was brought into existence by the Fed, was largely repaid by the banks at a profit, and now is available for re-spending. If we didn't need to stimulate further activity so that we could lower unemployment from 10%, it would be a good thing to do to pay off debt. (Kind of funny, given the ridicule that was unleashed on Gore and Clinton for suggesting that their surplus be spent decreasing the debt.) But it's not time yet. The market is up, but investment and hiring is not. If that situation is left to founder, there will be another dip, because we have to build up employment to build up demand. There's just no question that you're wrong. If the federal government had gone to low deficits and low taxes, there would be a full-bore depression right now. If we don't stimulate now, there will be another dip on this very deep recession. And if it works, most of the added debt will be paid off when our output rises. At the top of the curve, in a couple of years, we'll have the capacity to repay what we need now. It really gets boring to hear all this crap from conservative economists and politicians, whose sage advice got us stuck in this mess in the first place.
theycensoredmeDec 10, 2009
Peter Schiff should be the financial adviser to the white house. If everyone would have listened to people like him to begin with we wouldn't be in this mess!
gkiltzDec 10, 2009
As long as that increased spending leads to increased income, and therefore increased tax collection going forward the trick works. The danger here is blindly flinging money at the problem without understanding it's potential for future returns.
theman8221Dec 10, 2009
id suggest reading into the laffer curve, however since digg is not tolerant on non socialist/communist ideals i expect to be dugg down, and insulted.Laffer curve suggests that government revenue increases as tax rates decrease (to a certain point then fall off...hence the curve)This is because as you approach a fair tax rate, people stop hording cash offshore and using tax loopholes.Look into it, its very interesting and backed up with real data.
groundshopDec 10, 2009
Reading up on it now, and it seems very logical. I don't necessarily think it's exclusive of the keynsian monitary policy I mentioned above either, as it could probably be worked into both Rep/Dem models of removing liquidity from the money supply. Consider a bubble: a great time to both pay down the deficit and attempt to reduce risk (like what happened with US housing). Obtaining the maximum amount of revenue from taxes would be the best way to stymie the economy's excessive growth, and that Laffer curve seems to be spot on how to do it.
cputeraceDec 10, 2009
No, it originates in the White House, Congress just rubber stamps it to make it "legal".
tdogg241Dec 10, 2009
<a class="user" href="http://dictionary.reference.com/browse/a+lot" rel="nofollow">http://dictionary.reference.com/browse/a+lot</a>
tdogg241Dec 10, 2009
Chocolate Bush and Vanilla Bush? Really?Yikes.
juice7Dec 11, 2009
You're right, but people will still go on believing what they want to believe. It's going to take a major economic collapse in order for people to start accepting the truth that we can't sit back comfortably while the government fixes all of our problems. When that time comes I think we'll either change our ways and enter an age of prosperity or enter a very dark age where Alex Jones' ideas become a reality. It depends on whether or not they can still convince us that it was all the free market's fault and we didn't have enough government intervention during this time period. We'll see.
ShovelbabyDec 11, 2009
If businesses and individuals who have small businesses are allowed to keep money, they will use it to invest in the growth of their company if they are not threatened of future tax increases. Even in an economic downturn, they know that things will change at some point. They will also spend the money efficiently because they have to in order to keep in business. Jobs are created and more money is made in order to be taxed.If the government is the one to spend the money, they are spending the people's money so it is like taking water from the deep end and putting it in the shallow end. It does not increase the GDP. Also any jobs that are created are ones that need to be paid for in the future (adding to the budget) or discontinued after a period of time. Look at how the stimulus has been spent so far to see what happened with that money. It has not been used efficiently. The jobs created were at an astronomical price per job. They don't have shareholders or the need to keep in the black to stay in business, so they don't keep a tight watch on the funds. What has been spent was mostly to repay political debts and not to truly try to stimulate the economy.