Thursday, August 09, 2012

Ignore Fiscal Policy and Logic

The Fed's problem is that all the newly created "money" has gone unspent and unlent. To repeat an analogy I have used to explain why there is no inflation – it is as though Bernanke dropped $10 million in newly printed bills on your lawn – and you are so worried you hid them in the garage.

I'll say it again for the cheap seats.  You not only need low taxes, but with the socialists running rampant in our government and our citizenry/voters, you will now need constitutional guarantees that the government will not:

1.  Confiscate above a certain percentage of your income
2.  Confiscate above a certain percentage of your wealth

Without these guarantees the producers will sit on the sidelines and watch with amusement what the parasites will do when the money runs out.  Again, we're going off the cliff, but we're taking you with us.

(actually, this video is quite apropos as to how I see it, the producers resigning to their fate and the parasites not believing it can possibly be over)


Anonymous said...

This is a great "mystery" of economics that even super geniuses like Krugman don't understand. With such low interest rates and loads of cash on balance sheets, why isn't the economy fired up? What is everyone waiting for?

Answer: the zombie banks, the zombie industries, the zombie HUMAN BEINGS, have not felt the squeeze of a real recession yet. A real recession that would put them 6 feet under, for good, so that the living might thrive.

The boom must have a bust. If the cycle is blunted, or enhanced, it leads to an unnatural and unhealthy economy. Governments will do everything except simply accepting reality.

Sometimes a bad bust will end a government. The reason we haven't had a real fall yet, is because it's going to be very bad when it hits.

Anonymous said...

Stupid question time. How hard would it be to get a constitutional amendment ratified that specifically limited the income tax rate or perhaps limited the federal budget to a percentage of GDP?

Just a Canadian observer thinking out loud. Cheers,


Dan said...

The problem with things like
"constitutional restraints"
or "constitutional guarantees" is
that these things would be merely
words on paper, to be ignored ad lib and as desired by those who sieze power. The Second Amendment is probably the simplest most clearly worded admonition that could possibly be put to paper yet it is totally and completely ignored by politicians and more than 90% of the voting public.

What part of "shall not be infringed" is so compicated....yet we have 20K or more laws on the books in America that directly violate this proscription.

Words on paper have no meaning, no value, no force unless they are backed up by blood, the blood of tyrants and if necessary the blood of citizens and patriots.

Anonymous said...

Dear Captain,

The problem you stated is incomplete. Yes you need low income taxes, low wealth taxes, none would be even better.

But you also need the government to get out of the way of productivity. It takes so many permits, medallions, licences, inspections etc. before you can start to work for yourself, this is as destructive to the economy as taxes.

In fact, regulations and requirements are even more destructive.