Posted by
TheTrucker on Saturday, January 19, 2008 2:39:27 PM
Supposed "supply side" econ is based on the ridiculous notion that there is some limited amount of money and that rich people will continually "invest" money so as to make more money. Both of these assumptions are not just faulty. They are asinine. The government SPENDS money into existence and the bank loan process creates credit/money (which of the two is true depends on your personal definition of money).
I don't see what is so hard to understand about fiat money, yet people just can't seem to grasp it. The government creates money and buys an aircraft carrier and then the government TAXES the money back out of the economy. It is the tax that gives the money value in that the money must be used to offset a tax obligation. Were it not for the tax the money would have no value. All the deficit spending has created a glut of dollars and so oil prices are high as measured in dollars.
Then we have the mortgage people and the securities people that, due to the repeal of Glass Steagall, are able to "create money/credit" as a bank and we have even more dollar dilution. Result = Housing bubble just like result = Dot.com bubble earlier (Glass-Steagall and capital gains tax cuts happened in 1997). And the Gingrich people had already made it almost impossible for the shareholders to sue the thieves running the companies. Add in the H1B indentured servitude software developers and you have bubble blowing stuff in spades. Imagine being able to reduce the cost of R&D in your high tech company by 50% and to lie about the books to boot. We be blowin bubbles.
The "Dot.com" bubble notwistanding, the reality and the data show us that highly progressive income tax rates produce a healthy growing economy such as that of the mid 90's. These data cannot be refuted. The "supply side" wonks can only lie about reality and attempt to hide the history.
When rich people get a tax break they have more money to loan to the government. The government, of course, will be borrowing lots of money to finance its operations because it gave the rich people a tax break to start with. End of story.
Ya see, kids.... If the rich people can foresee that the middle people will be getting more poor then there is no reason for them to "invest". Why build a shoe factory when people can't afford shoes? The only thing that a bond holder wants to here more than the music of a recession is the music of another depression. Why the hell would they want anything to change? They are in the cat bird seat and they are perfectly happy for all to stay as it is. Oops, I forgot. That is what conservatism is. Scuse me :/