On one hand, you tell us, let us (the tax payer) decide what is best to do with the excess money the government is collecting, on the other hand, you promote a new tax policy which will form "capital".
These aren't contradictory. The government tax burden is too high on everyone and everything. That's why I agreed with one of your previous posts.
If MZM was not standing at about 30% of where it was last year, I could understand a "cry for capital formation", my tenet is that the money is there, there just are no economically sound investments for that money (right now, that may change, of course), because in general the whole world is awash in excess production capacity.
You're making a major mistake by assuming MZM has anything to do with investment capital. This is the hallmark of demand management. The FED is creating a huge pile of money but it isn't being employed. Why not? Excess capacity? You say there are no sound investments, but is that due to capacity, concern about return on existing capacity, costs to add capacity, or risk of borrowing?
The FED creates borrowable money. Investment capital comes from saved money created by human effort. Money is money, but when the money has strings attached, it won't be risked. A loan is not investment capital. A failure to understand this was an important reason why the '60s ended in stagflation. The school of demand management sees the availability of capital strictly linked to the cost of money. Investment capital has no cost. That is, if it's lost, there's no consequence, so the investor is more likely to take the risks necessary to create new things.
Why should the government decide that investments in telecoms is what we need now?
It shouldn't, but telcom doesn't get the benefit that autos do in a final demand stimulating tax cut.
Let the market determine that. I don't where you get that there is shortage of capital
That's what Chambers and Greenspan said. Do you think they are lying?
(the fact that there is no such a shortage is what might very well delay the impact on the economy of the consecutive urgent interest rate reductions by the fed)
Interest rate cuts don't stimulate final demand. You've been reading too much demand management hokum. The FED has lowered rates but that has been to no avail, so they have aggressively resorted to raw money creation(there is a big difference). Maybe that won't work either.
Could it be that the bubble that we have just experienced might have been due, partially, due to excess capital formation,
The capital formation took place in the mid '80s. It was shut off by Clinton. The stock market explosion represented a squandering of the accumulated capital. Now we're back to a situation like the early '70s. The next step is for the FED to allow ever greater inflation in order to prop up final demand, since the final demand oriented tax cut will have no effect on future production. How is that possible? Because investment adds value to the future whereas consumption adds nothing to the future.
seeking at any cost medium of investments, and finally being sent to money heaven,
You are confusing stock market prices with capital investment.
That is one reason I suggest a more rational method of taxation, and a method that can be used rapidly to adjust taxation without changing the tax structure, within the year when imbalances occur.
On one hand, you tell us, let us (the tax payer) decide what is best to do with the excess money the government is collecting, on the other hand, you promote a new tax policy ... |
