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a typical DP (double post)
If we were to hit an inflationary bubble, wouldn't we be witnessing growth? Luck? Nope! Inflation is not even in the cards....
I'm pretty sure we were talking about Obama's campaign pledge to lower taxes on 95% of American's.
You want a quick way to stimulate the economy, cut a bunch of $10k checks to the bottom 50% of income earners.
It will be circulated through the economy and it will be done fast.
It would help the economy if the Republicans in the Senate would release the bill to increase small business lending. After all the majority of NEW jobs created are created by small businesses.
Which is BS since 95% od people don't even pay federal income taxes to start with!
Can we say inflation? I knew we could! Notions like this seem like great ideas till you talk to someone that understands how the economy works, how money works, and why just giving people cash ain't gonna do much other then a very short term blip followed by long term repercussions.
No, not necessarily, the most famous example of this monetary policy is the Wiemar Republic.
For those who don't know what quantitative easing means, it's a dangerous gamble the fed is taking now in an effort to save the economy.
The term quantitative easing (QE) describes a monetary policy used by central banks to increase the supply of money in an economy when the bank interest rate, discount rate and/or interbank interest rate are either at, or close to, zero.[citation needed] A central bank does this by first crediting its own account with money it has created ex nihilo ("out of nothing").[1] It then purchases financial assets, including government bonds, mortgage-backed securities and corporate bonds, from banks and other financial institutions in a process referred to as open market operations. The purchases, by way of account deposits, give banks the excess reserves required for them to create new money, and thus a hopeful stimulation of the economy, by the process of deposit multiplication from increased lending in the fractional reserve banking system. Risks include the policy being more effective than intended, spurring hyperinflation, or the risk of not being effective enough, if banks opt simply to pocket the additional cash in order to increase their capital reserves in a climate of increasing defaults in their present loan portfolio.[1]
Quantitative easing - Wikipedia, the free encyclopedia
No, not even close. The Wiemar Republic was printing money and paying war debts, purchasing goods, etc.... Since monetary policy is a directive of the Federal Reserve, we do not have to worry about such scenarios. If the Fed began purchasing bonds directly from the treasury, you would then have a valid point. Since it does not..., well you get the point.
There is a very direct relationship to spending and inflation. We are approaching deflation with short term rates approaching the zero bound; therefore spending (as a means of facilitating growth) is virtually non existent.
Can we say inflation? I knew we could! Notions like this seem like great ideas till you talk to someone that understands how the economy works, how money works, and why just giving people cash ain't gonna do much other then a very short term blip followed by long term repercussions.
damianvincent
What would help small business is certainty in regards to the Bush tax cuts, will they expire, will they extend them.
Another thing that would help small business, is to remove the massive costs they are soon to face due to Obamacare.
Obama wants to pay for this small business package, a one time shot, with more taxes, a permanent revenue stream.
And so that's a reason to take even more money out of the private sector? If they weren't spending before, how on earth will a tax increase help?
Inflation is ever so desirable in this economic climate. Well, not true. If you do not own anything, have any assets, etc..., then no inflation (or deflation) creates a scenario of indifference.
Inflation is ever so desirable in this economic climate. Well, not true. If you do not own anything, have any assets, etc..., then no inflation (or deflation) creates a scenario of indifference.
If you gave 50% of wage earners 10k, you'd have a situation of too much money chasing too few goods. Inflation. Long term effects would be caused by "Where did this money magically come from? More borrowing? Just printed for fun?"
And so that's a reason to take even more money out of the private sector? If they weren't spending before, how on earth will a tax increase help?
It would boost direct consumer spending, which is what we are wanting.
Remember that it isn't $10k per person but $10k per family, which doesn't make it as much as you think.
If you gave 50% of wage earners 10k, you'd have a situation of too much money chasing too few goods. Inflation. Long term effects would be caused by "Where did this money magically come from? More borrowing? Just printed for fun?"
Besides this being a silly idea. What would the money be spent on. Recent expeience shows either paying down debt or consumer products mainly helping the Chinese economy.
Not to mention you re just stealing money from future generations to make this group feel better, pretty selfish.
Let me explain so not to miss anything important.
When an economy is expanding, tax receipts (naturally) increase. When an economy is shrinking, tax receipts (naturally) decrease. During a period of shrinking tax receipts, spending as a whole begins to decelerate creating even greater downward growth prospects. Unless..... someone begins spending. That someone was the federal government; in a half assed attempt to minimize unemployment. Half assed? Why? Because the stimulus (as i have said from Jan 2009) was about half the size needed to meet the presidents prediction(s). It is pretty certain that without another stimulus package of equal or greater magnitude (along with total infrastructure focus), the US economy will slip back into recession within 6-9 months as global stimulus fades.
If private business was spending, there would be no need for fiscal stimulus.
Tax increases are necessary to make up the deficit spending required by government because the private sector was unwilling to step up when needed.
If private business was spending, there would be no need for fiscal stimulus.
Tax increases are necessary to make up the deficit spending required by government because the private sector was unwilling to step up when needed.