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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: gpowell who wrote (47705)	12/19/2005 2:21:08 PM
From: ahhaha	Respond to of 110194

A relaxing output constraint is one of the determining factors in the level of borrowing and therefore it appears you are reasserting what Grace said previously, that government spending financed through borrowing results in a higher state of growth than spending financed through taxes. Addressed in #47722. Given that borrowed resources must have come from current private wealth, just as taxes do, for the output constraint to be any different between the two there must be a shift in the marginal behavior of economic agents. And thus, asserting the output constraint is relaxed with borrowing begs the question. To be specific, the change in marginal behavior comes from incentive, since incentive delivers a non-linear response. The output constraint refers to a persistent condition that holds only if tax rates remain constant. If taxes are reduced more government borrowing can be tolerated while realizing an increase of overall wealth. No begging because the other side of the equation has a non linear function where it was previously assumed that it was linear. The linear claim is the crux of the 'crat argument, "cutting taxes is just a giveaway to the rich" when in fact, cutting taxes causes the rich to pay more taxes. They do so because they get more wealth. In contrast cutting in the middle causes more final demand and no change in government's take or position to take.