If I recall correctly, that is why Bush said he was doing with the tax cuts.
You recall incorrectly. Increasing consumption was the reason expressed by endless bonehead demand school economists and Democrats who insisted that more broad based cuts be included like the rebate and expansion of the earned income credit.
Targeting final demand can't be a goal. It's merely an outcome. Every time making it an explicit goal it has created distortions which end up in recessions. Reducing taxes raises all boats including consumption spending, as JFK asserted.
If the goal was to increase business investments, rather than tax cuts aimed at an increase in personal income (primarily for the rich), they should have:
(1) Decreased corporate tax
(2) Introduced investment incentives
Yes! That would have been nice if it could have been gotten through a Congress where the Democrats have an enormous amount of control. Corporate tax is simply a way of increasing the general taxation level in a way that is hidden from most people. All corporate taxes are borne by the shareholders and those who buy the end products but almost no one understands this, so in the attempt to soak the rich and evil corporations, we soak ourselves.
They did manage to raise the ceiling on 149 expense, so that small business could write off higher capital expenditure in one year rather than depreciate it over time. And they lowered the tax on dividends which makes showing a profit and paying out dividends more attractive to companies as well as giving elderly retired individuals who tend to hold dividend paying stock for income a tax break.
The biggest problem with the tax cuts were that they were too small in aggregate. This means in a few years the politicians who limited the size and forced the compromises will be able to say once again that tax cuts don't work.
I am talking about the risk of default on t-bills when a country possesses a printing press (as they all do), which is ZERO
Based on your implied hypothesis and following your desired conclusion, the risk is unlimited to those who fund government.
Worse comes to worse, US can always print more USDs and pay holders of t-bills on maturity.
You refute your own assertion. If worse comes to worse, printed dollars won't be honored. (as those Rubles in my Russian example)
You can't have missed the Fed talking down the dollar in the past year or so, though.
I missed it, because it didn't occur.
Surely, you jest. I am sure you know at some level that this statement is impossible to defend, so I will just pass the temptation to give an overview of recent history.
Are you confusing monetary policy with dollar policy? I'll give you the benefit of doubt because you aren't from this country and even most Americans can't adequately explain that dollar policy is under the purview of the Treasury, monetary policy is over seen by the Federal Reserve and there is a difference between the two.
It doesn't matter in the least what the dollar policy says. It only matters what kind of economic policy the US has. As the economy strengthens the dollar is falling, funny how that works. Back in the 70s the dollar fell as well, but for entirely different reasons.
Could you then explain it for those of us who are a bit slower in understanding the world why imports have to increase as the economy gets stronger (a claim not totally supported at this point) despite much higher cost of imported goods?
Higher cost of imported goods? If that was the case, Bush wouldn't have raised tariffs on steel and clothing, to name a few.
US has become more socialist and therefore less efficient, the cost of production here has risen relative to that of foreign production. Inefficient workers prefer to buy low cost imports over what they themselves produce. This is universally understood. By the way, foreign producers can lower prices to compensate for the dollar. US labor would never do that even if they were faced by extinction.
Tell me, Grace, do you really think China & Japan bought USD 20 bn out of USD 57 bn of the latest US t-bill auction because they TRUST the USD as a currency?
Yes.
Do they, like, BELIEVE in the USD???
It's not a religion. |
