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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 78.12

+0.1%

Dec 22 3:59 PM EST

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To: TigerPaw who wrote (60026)	6/27/2002 6:00:20 PM
From: RetiredNow	Read Replies (1) of 77400

Tiger, go back and study macroeconomics again before you start to really believe that statement. How do we define aggregate demand? Here's a simplified formula for you, excluding the multiplier effect: AD = Consumer spending + Business spending + Government spending - Taxes If you decrease taxes, you increase aggregate demand. If you increase aggregate demand by decreasing taxes, you are stimulating the economy by that amount times a multiplier effect factor. That stimulus creates economic activitiy, which spirals into more aggregate demand and higher GDP, which generates more tax revenue through the virtuous cycle. The net effect of a decrease in taxes, when the government is experiencing a current surplus is actually to create a net increase over the long term. The government has an agency problem with surpluses in that they tend to use money much less effectively than the private sector.

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