The-Hogs.net - Washington Football Discussion, Redskins to Commanders Era

Those tax cuts seemed to get us out of the recession we were in, so it must have worked.

JansenFan wrote:Those tax cuts seemed to get us out of the recession we were in, so it must have worked.

Or maybe they kept us in the recession longer than had they not been enacted. Or maybe it was the deficit spending that got us out of the recession. "Seemed" would be the optimal word in your post.

JSPB22 wrote:

Irn-Bru wrote:Then the problem isn't the tax cuts. . .

No, but they certainly exacerbate the problem. I have no problem with tax cuts, especially for the working poor, and the middle class. These are the people who actually spend the money they get from tax relief. The trickle-down argument holds no water, because the rich can already afford to invest, and extra wealth is simply hoarded, and does not return to the economy. Also, paying down the national debt, is a huge moral issue. We are saddling tomorrow's generations with today's debt. At some point we are going to default on our obligations. Where will that leave the economy?

* Tax cuts only exacerbate the problem when spending remains out of control. This is perhaps the main argument that Reps-who-don't-like-Bush give. Smaller government means more than smaller taxes. There is certainly a problem when taxes are cut (though they have only been cut marginally) and spending increases, especially for an aggressive war. But, again, the problem isn't primarily with the tax cuts.

* Tax cuts, even for "the rich," will always create wealth. Most of the tax cuts that have "given money to the rich" are those that reduce penalties in investing (and the returns from investing). Taking money and placing it where it belongs (with the individuals who obtained it peacefully) is always a good option. The idea that "the rich" take tax cuts and "hoard" the wealth instead of "investing" it is patently absurd. What do they do: stuff it in their mattresses? Even an investment in a bank account is an investment. In order for money to not lose its value in one's possession, it needs to appreciate at about 7.5-8% every year (see my paragraph at the bottom). . .there is no way that the rich don't invest this money or use it to consume. Otherwise, I ought to get into the High End Mattress Repair business.

* Since you mentioned the "trickle down" argument: I don't care for the trickle-down argument nor for its refutation, but I don't see any way around the idea that private ownership of wealth and the means for production is the only possible system of social order.

* The problems with our national are created almost entirely by inflation, which is perhaps the most vicious form of taxation available to our government. Our national debt doesn't come from overstepping an annual budget gained from income tax, but rather is created by the inflationary policies of the fed. (War is a great excuse to create more money in the printing press, by the way).

Irn-Bru wrote:* Tax cuts, even for "the rich," will always create wealth. Most of the tax cuts that have "given money to the rich" are those that reduce penalties in investing (and the returns from investing). Taking money and placing it where it belongs (with the individuals who obtained it peacefully) is always a good option. The idea that "the rich" take tax cuts and "hoard" the wealth instead of "investing" it is patently absurd. What do they do: stuff it in their mattresses? Even an investment in a bank account is an investment. In order for money to not lose its value in one's possession, it needs to appreciate at about 7.5-8% every year (see my paragraph at the bottom). . .there is no way that the rich don't invest this money or use it to consume. Otherwise, I ought to get into the High End Mattress Repair business.

Everyone knows that cash goes into a mason jar, which is buried in the back yard.
Seriously though, there are other ways of hoarding money. The "rich" are able to hire accountants and tax attorneys to effectively hide their money as if it were in a mattress. Wealth protects wealth, by controlling the very system by which that wealth would be taxed. Corporate subsidies in the face of record profits, defy logic. And yes, I know that a bank account is an investment, but a million dollars in a checking account, does not benefit the economy as effectively as spending a million dollars on groceries does. Lastly, interest on the debt is at least as big a problem as inflation. Those two forces make it even more imperative to pay down the debt sooner, rather than later.

I think I'll rent a backhoe & start digging up rich folks back yds. The fact that rich folks have ways of protecting their wealth from the IRS doesn't mean it's kept out of the economy. That would be a foolish thing to do, & whatever else may be true of the rich, they are not fools when it comes to money.

The trickle-down argument holds no water

Isn't that the whole idea?

Since tax revenues are increasing, I don't see how cuts in tax rates are part of the problem. Congressmen's penchant for spending (independent of party) is the cause of deficits. A line item veto on spending bills might help, but I'm not holding my breath for congress to pass that.

* The problems with our national are created almost entirely by inflation, which is perhaps the most vicious form of taxation available to our government. Our national debt doesn't come from overstepping an annual budget gained from income tax, but rather is created by the inflationary policies of the fed. (War is a great excuse to create more money in the printing press, by the way).

Inflation is not the problem & hasn't been since the Carter admin. You'll have to explain how fed ploicies cause national debt. Debt is caused by spending more than you get. Printing money is a way of covering the debt, not a cause.

Today is your (my? ) lucky day, JSPB, because I both (a) agree with you on a point or two, and (b) think yupchagee is wrong on a point or two.

JSPB wrote:Seriously though, there are other ways of hoarding money. The "rich" are able to hire accountants and tax attorneys to effectively hide their money as if it were in a mattress. Wealth protects wealth, by controlling the very system by which that wealth would be taxed.

I don't agree with that first sentence. Either the money is invested or it sits; I don't think that you can invest money in such a way that it effectively sits, unless it is in a strong box or something similar. You'll have to elucidate the second sentence for me, as I couldn't understand a word of it.

JSPB wrote:Corporate subsidies in the face of record profits, defy logic.

Agreed!

JSPB wrote:And yes, I know that a bank account is an investment, but a million dollars in a checking account, does not benefit the economy as effectively as spending a million dollars on groceries does.

Who's to say? If this were true, we could establish a beaurocracy that would take millions in tax dollars and buy groceries to give away to the poor instead of having them invested. . .

What's "good for the economy" can't be determined by a central organizing power. Who's to say that 1 million on stocks is worse than 1 million on groceries? My answer is consumers, who tend to spend money on the things that they prefer.

The reasoning that says governments can effectively determine what is "good" for an economy has led to many of our current problems: the energy crisis, the problems with our road system, health care costs and problems, etc.

yupchagee wrote: Inflation is not the problem & hasn't been since the Carter admin. You'll have to explain how fed ploicies cause national debt. Debt is caused by spending more than you get. Printing money is a way of covering the debt, not a cause.

Oh, I see. So the government can print off a billion new dollar bills and cover their asses without affecting the relative purchasing power of money?

Great--let's print off infinity bills and distribute them among Americans so that they have infinity purchasing power. We can even take care of our debt in the meantime!

And, if you agree that infinity (or near-infinity) bills would create a problem for the value of a dollar, why not see that the actions of the federal reserve have a proportional, detrimental effect on our dollar as it stands today?

As for inflation not being a problem since Carter, I beg to differ. The Federal Reserve has been printing off enough money that the dollar inflated at double-digit rates during the 70s and early 80s and has been inflated at single-digit rates ever since. The present dollar is worth no more than 10 cents of the 1970 dollar and 50 cents of the 1980 dollar.

Problem? I think so.

And inflation is a reason the claim can be made that decreasing taxes increases tax revenue. Yes we are taking in more money, but it has less value. As for my second sentence, I was stating that wealth, particularly corporate wealth, has corrupted our legislative process to the point that legislation is actually written by corporate lobbyists to benefit the very corporations the legislation regulates.

Isn't the whole reason we fought the British way back when because of taxation? Just a thought.

Cappster wrote:Isn't the whole reason we fought the British way back when because of taxation? Just a thought.

Taxation without representation. And you could make the case that we no longer have representation.

yupchagee wrote:
Inflation is not the problem & hasn't been since the Carter admin. You'll have to explain how fed ploicies cause national debt. Debt is caused by spending more than you get. Printing money is a way of covering the debt, not a cause.

Oh, I see. So the government can print off a billion new dollar bills and cover their asses without affecting the relative purchasing power of money?

I think you have cause & effect reversed. Deficits are reason for printing more money. Increased money supply can cause inflation. A billion $ in our economy won't have much effect as it's only about .01% of GDP.[/quote]

As for inflation not being a problem since Carter, I beg to differ. The Federal Reserve has been printing off enough money that the dollar inflated at double-digit rates during the 70s and early 80s and has been inflated at single-digit rates ever since. The present dollar is worth no more than 10 cents of the 1970 dollar and 50 cents of the 1980 dollar.

Carter left offive in 1981. Inflation came down soon after. "inflated at single digit rates"? this could be 1%. I know it's higher than that, but it hasn't been high enough to be a problem. Printing money isn't the only (or even main) cause of inflation. Inflation comes from increased demand (increased money supply is a factor in this) &/or decreased supply. Increased money supply is a lot more than just the cash in circulation. What % of your spending involves cash?

Another way that tax revenue is "increased" by reducing taxes is by getting corporations to repatriate money made overseas, by taxing it at a greatly reduced rate. Corporations move operations overseas to get cheaper labor costs, but money made overseas will not be taxed until it is repatriated. Last year Congress gave a tax break to corporations who repatriated this money. As a result we have more tax revenue this year, but at what cost? Inverting corporations off-shore is another way to hoard wealth and avoid paying taxes.

Corps have been moving facilities & jobs off shore for decades. This will continue no matter who controls Congress, the Whitehouse or anything else. Do you expect corps. to act contrary to their (short term) economic interest? Don't hold your breath. I don't know what you mean by "inverting corporations", never heard that term before, please translate.

I agree that offshore tax shelters are popular, I don't see how reducing tax rates exacerbates this, in fact it might have some mitigating effect.

yupchagee wrote:Carter left offive in 1981. Inflation came down soon after. "inflated at single digit rates"? this could be 1%. I know it's higher than that, but it hasn't been high enough to be a problem.

Yes, a single inflation rate could mean 1% every year, but in reality it doesn't. The average rate has been much higher than a mere 1%.


"It hasn't been high enough to be a problem"? Says who? Remember that inflation is compounded over time just as investments are. The dollar since 1914 (around the time that the central bank was introduced under Wilson) has undergone about 2,000% inflation. A few percents every year certainly add up. . .

yupchagee wrote:Printing money isn't the only (or even main) cause of inflation. Inflation comes from increased demand (increased money supply is a factor in this) &/or decreased supply.

The Fed's increase in the money supply is the main cause of inflation. Their government-granted powers to print more paper fiat dilutes the real purchasing power of money. When you instead posit inflation as being caused by "increased demand or decreased supply", my question is: of what? Money? How is that a refutation of anything that I have said?

"It hasn't been high enough to be a problem"? Says who? Remember that inflation is compounded over time just as investments are. The dollar since 1914 (around the time that the central bank was introduced under Wilson) has undergone about 2,000% inflation. A few percents every year certainly add up. . .

I understand the principle of compounding. a 3% inflation rate for 20 yrs results in 80% inflation. That doesn't make it a problem. As long as our standard of living isn't impacted (ex Confederate States, Weimar Germany), where's the problem?

The Fed's increase in the money supply is the main cause of inflation. Their government-granted powers to print more paper fiat dilutes the real purchasing power of money. When you instead posit inflation as being caused by "increased demand or decreased supply", my question is: of what? Money? How is that a refutation of anything that I have said?

Our currency is part of the national debt. Without runaway spending we could eithr
a) print less money
or
b) have money actually backed by something (remember silver certificates?)

Increased demand for or decreased supply of goods & services. Example: Huricanes shut down oil refineries. This reduced supply of fuel, increasing price.

yupchagee wrote:I understand the principle of compounding. a 3% inflation rate for 20 yrs results in 80% inflation. That doesn't make it a problem. As long as our standard of living isn't impacted (ex Confederate States, Weimar Germany), where's the problem?

The problem is in the business cycles of boom and bust that it creates. Distortions to the money supply lead investors to invest or save when they ought to do something else. The result, large swings in the market that create unsustainable, booming growth (as well as recessions and depressions), have catastrophic economic impacts. Once a recession (or a depression) hit, malinvested resources need to be liquidated and applied to their most urgent uses, and this is a painful process that affects the standard of living greatly.

I'm still not sure how you think that large decreases in the value of money over time will not affect things.

yupchagee wrote:Our currency is part of the national debt. Without runaway spending we could eithr
a) print less money
or
b) have money actually backed by something (remember silver certificates?)

I personally don't remember money that was backed by a commodity, but I sure wish we could return to it. I agree with you here.

yupchagee wrote:]Increased demand for or decreased supply of goods & services. Example: Huricanes shut down oil refineries. This reduced supply of fuel, increasing price.

I do not see how that is related to inflation. I'm defining inflation as the decreasing purchasing power of money due to an expanded supply of money. Higher prices on goods and services are symptoms, not causes, of inflation.

Irn-Bru wrote:

yupchagee wrote:I understand the principle of compounding. a 3% inflation rate for 20 yrs results in 80% inflation. That doesn't make it a problem. As long as our standard of living isn't impacted (ex Confederate States, Weimar Germany), where's the problem?

The problem is in the business cycles of boom and bust that it creates. Distortions to the money supply lead investors to invest or save when they ought to do something else. The result, large swings in the market that create unsustainable, booming growth (as well as recessions and depressions), have catastrophic economic impacts. Once a recession (or a depression) hit, malinvested resources need to be liquidated and applied to their most urgent uses, and this is a painful process that affects the standard of living greatly.

I'm still not sure how you think that large decreases in the value of money over time will not affect things.

yupchagee wrote:Our currency is part of the national debt. Without runaway spending we could eithr
a) print less money
or
b) have money actually backed by something (remember silver certificates?)

I personally don't remember money that was backed by a commodity, but I sure wish we could return to it. I agree with you here.

yupchagee wrote:]Increased demand for or decreased supply of goods & services. Example: Huricanes shut down oil refineries. This reduced supply of fuel, increasing price.

I do not see how that is related to inflation. I'm defining inflation as the decreasing purchasing power of money due to an expanded supply of money. Higher prices on goods and services are symptoms, not causes, of inflation.

I forget how old I am (or how young others are). When I was young some bills were "silver certificates", redeemable for silver at the bearers request. I don't know anyone who actually turned any in for silver.

Inflation is usually defined as increased cost of goods & services (as reflected in the CPI for example). This can be caused by changes in either the demand curve or the suply curve. I have trouble explaining it with drawing graphs.

Inflation is usually defined as increased cost of goods & services (as reflected in the CPI for example). This can be caused by changes in either the demand curve or the suply curve. I have trouble explaining it with drawing graphs.

I understand this definition but reject it completely. Inflation seems to me to be monetary. Rising prices are therefore a logical result of inflation but not inflation itself.

Irn-Bru wrote:

Inflation is usually defined as increased cost of goods & services (as reflected in the CPI for example). This can be caused by changes in either the demand curve or the suply curve. I have trouble explaining it with drawing graphs.

I understand this definition but reject it completely. Inflation seems to me to be monetary. Rising prices are therefore a logical result of inflation but not inflation itself.

OK, you're using a different definition of inflationthan most. By your definition, I guess you're right. I was using the more common definition & according to that, I think I'm right.