that money is properly invested and then you're leveraged.
Mr. Bush isn't wisely investing in income generating vehicles, instead
the money is spent on Pork; which is consumption. As the consumption
increases, more and more of your income has to go to service the debt
rather than investment. Further you've no capital to cover
outstanding liabilities.
Eventually you'll get to the "hard landing" point - rapidly rising
interest rates and inflation will be the likely only solution.
On Fri, 08 Oct 2004 18:28:52 -0400, Won Lee <[EMAIL PROTECTED]> wrote:
> At 17:15 10/8/2004 -0400, you wrote:
> >I think you're a bit mistaken about what helps the economy. Government
> >spending helps the economy more than cutting taxes. It's a staple of
> >economic theory that the velocity of a dollar (the speed with which it
> moves
> >from entity to entity) is much greater when it comes from the government,
> >because the government does not save the money but people do. The economy
> >is slowly recovering from a bubble, and this is certainly helped by the
> >spending. However, the bankroll for this spending of this current
> >administration is not covered by anything in the bank, and this spending
> >does is not helping the people who live in the US as much as is it some
> very
> >high-profile corporations. I think that people generally realize this -
> >money is flowing out of the government but not back in - this also happens
> >to be recipe for inflation (think Reagan years). People are hoarding the
> >money they have as much as possible. Corporations who got big tax cuts do
> >not need to hire more people because people are 1) hoarding their money 2)
> >will work for less to keep their jobs and 3) are becoming more productive
> >using things that are bought to make them more productive with the money
> >that is saved from corporate taxes. Jobs are not climbing in a meaningful
> >way, they have little rises and then fall back down. Taxes need to be
> >increased - spending needs to happen - the money needs to circulate rather
> >than sit in somebody's (or some corporation's) bank account. Everybody
> gets
> >richer when the money flows.
>
> I'm going to address a lot of things in a big mess...
>
> This is a very generalized, and often miss-applied, derivative of Keynesian
>
> economics. We let the Government spend our way out of troubles. I'm not
> too familiar with the whole concept but the basis is that is everything
> else stays the same but the government increases spending that overall
> output will increase and this will lift the overall economy. My
> understanding is that this may or may not be true in a more global
> economy. A clear example of this is that we can no longer control
> everything else. We can't stop China from consuming oil and increasing the
>
> cost of crude oil. So increase spending by the government may not increase
>
> output if the cost to produce can't be controlled. Like I said, I'm not
> too familiar with it but this was what I was told.
>
> If you want corporations to spend then uncertainty has to be removed. The
> largest single uncertainty right now is our presence in Iraq. We don't
> know how long we are going to commit troops there. Some of the price
> increase has to be due to the our presence in Iraq. Some will argue that
> not capturing all the terrorist leaves us vulnerable to unknown risk in the
>
> future. And they do have a point. But everything is a risk vs reward
> proposition. And the risks of troops committed is more immediate and more
> quantifiable. That said, the well being of corporations shouldn't be the
> single factor that decides if we should partake in a military conflict or
> not. But it is something the administration should strongly take into
> account as economic prosperity has to be a very important goal.
>
> I have read reports that several noble prize winners have opposed Bush's
> tax cuts. And in the long run they are probably right. But I do agree
> with the administration on what they have done so far. They addressed a
> very pressing issue and fixed it. Because if you can't fix the short term
> then there will be no longer to fix. The classic example is, you have a
> chicken. You can either eat the chicken and live for another 30days or die
>
> within 3 days. Or you can wait 4 days and wait for the chicken the lay an
> egg. This is obviously an exaggeration. It's like those people that go
> on hyper-diets for a week. Their goal is to get into that dress or
> bikini. Dieting on water and vitamins for a life-time can't be too
> healthy. But doing it for a week isn't too bad. Damage can be controlled
> and long term effects can be avoided if done correctly. So they do that
> for a week. They get into that dress and then after that they can eat
> grilled chicken and a salad.
>
> There aren't may economists worth their BA PLUS financial calculator that
> will disagree that Bush's tax cuts stimulated the economic recovery. We
> obviously have a problem with Social Security, Medicare, and other things
> but we also had a very pressing problem with a recession. How about we
> find people some jobs and then fix them when we aren't in a recession? The
>
> only positive, and I use the term very loosely, I can see for addressing
> some of these issues now is that everyone understands and feels the impact
> of how great of a problem they are. But me, I can't do that. I see these
> people without job; worrying how they are going to put food on the table
> for their families. Unfortunately, the tax hasn't really help to create
> jobs. I would have liked to have seen some unnecessary programs cut to
> justify the tax cut. Maybe non-essential military spending. Maybe less
> government bail outs of poorly run airline and rail roads. But if we are
> going to borrow to fund the government while we cut taxes might as well do
> it when money is so cheap to borrow.
>
> Gruss also mentioned the borrowing. We should be borrowing. Lock in low
> rates. At the core of any business is taking calculated risk for
> rewards. As long as we don't keep borrowing when rates start to go up we
> should be fine. Deficits are not bad. That is like saying every person
> with a 5% body fat BMI is flawed. Some deficit is healthy. Personally, I
> don't know how much is too much. As a side note, Gruss and I have pretty
> similar politics but we come to some very different conclusions. He's
> social liberal and fiscally conservative too. I believe Bush and his
> administration did a good job. He doesn't. But I think we both have our
> doubts if he is the right man for the future.
>
> PS I have no idea how Reaganomics caught such a bad rap in revisionist
> history. I haven't studied the fiscal side of the 80s at all so I can't
> comment. But reading about the capital markets during that time is very
> exciting. You had revolutionary ideas and cut throat financing. Companies
>
> were forced to adapt as they were being assaulted by foreign countries. I
> remember in the 80s everyone was so certain that the Japanese were going to
>
> buy the US out. Maybe Reaganomics adverted that? Doubt it, but it had to
> have played some part.________________________________
>
>
>
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