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Strategies & Market Trends : Heinz Blasnik- Views You Can Use
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To: LLCF who wrote (1753)5/23/2003 12:35:21 PM
From: GraceZ  Read Replies (2) of 4912
 
Absolutely, I'm for doing what is right for the greatest number of people even if it means some person who is a lot richer than I am gets even richer.

Increases in consumption basically lead to higher prices, so you give in one hand and take it away with the other. Jobs come from deploying risk capital in productive assets. No one would underestimate the sheer size and scope of the consumption portion of the GDP. But the important thing to understand is that the consumption portion of the GDP is the portion of the economy that is driven it is not the driver, the driver is the investment portion. I think your Austrians would agree with me there. It is driven by the fact that when companies invest in productive assets they create jobs, when people have jobs they spend money. When its the other way around you basically deplete your productive assets. A rise in consumption at this time would simply sent a lot more dollars overseas to buy cheap goods from China.

The lowest 20% is always better off in the long run with a better job in a growing economy than they are with a few more dollars in some short term economic stimulus. The lowest 20% pays almost zero tax so giving them a tax cut is largely fruitless in terms of the macro economy. They do pay SS and Medicaid. I'd love to see those two cut back but I think you aren't going to see that happen in our lifetimes. The system will have to go completely bust before anyone realizes just what a ponzi scheme it is.
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