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Strategies & Market Trends : Ride the Tiger with CD -- Ignore unavailable to you. Want to Upgrade?

To: Rocket Red who wrote (174860)	9/16/2009 10:02:40 PM
From: tyc:>	Read Replies (3) \| Respond to of 314007

Seems to me they might do the right thing .... but only just ! There are better bets.

To: Rocket Red who wrote (174860)	9/16/2009 11:51:12 PM
From: E. Charters	2 Recommendations Respond to of 314007

Have you noticed that Ecuador and other small nations with nascent mining industries tend to grab too much from the industrialist, and puck themselves? This seventy per cent tax thing? Where did that come from? Where do the high mining royalties come from? This is where it starts the debate about socialist, acquisitive governments. It reminds me of all the democrats who want higher taxes in the states to make everything better in hard times. Where is the money going to come from? Where are these mythical fat cats? Do they really make way too much money? They think that the only people with any brains, or any responsibility are people who can get themselves elected. Right. We have been thru this before. Socialist states. Norway, Sweden etc. What distinguishes all the economic turnarounds of late is that they all lowered taxes. Right wingers in Columbia? Seem to have quelled much unrest and improved the economy, whilst lowering taxes to unheard of levels. The only thing bigger taxes seems to accomplish is make people who sponge off governments by bureaucracy, or contract, filthy rich, and everyone else filthy poor. n 1924, Secretary of Treasury Andrew Mellon wrote, "It seems difficult for some to understand that high rates of taxation do not necessarily mean large revenue to the Government, and that more revenue may often be obtained by lower rates." Exercising his understanding that "73% of nothing is nothing" he pushed for the reduction of the top income tax bracket from 73% to an eventual 24% (as well as tax breaks for lower brackets). Personal income-tax receipts rose from $719 million in 1921 to over $1 billion in 1929, which supporters attribute to the rate cut. [2] During both Ronald Reagan's and George W. Bush's presidencies, White House budget staff cited in the Laffer Curve a forecast that tax rate cuts would increase overall tax revenues. If you take the supply demand curve it looks like this. P is price, Q is production or quantity. D1 and D2 are demand curves. S is the supply desire curve. As the price goes up, producers want to supply more, this intersects with D which is what the customer demands or can afford. This sets the production level or market penetration. You can see as prices get lower, the consumer wants more. As prices get higher the producer wants and is able to produce more. As you raise or lower the price what happens? You follow the diagonal curve or line to where the price times production equals the maximum money for the minimum price. (For everyone, tax collectors, workers who collect the wage for production, consumers and producers.) You can more easily see that there is a maxima if you curve the diagonal line concave to the right. It seems to get to a point where you make the most money, somewhere nearer the left vertical line, than in the middle. At some point the whole thing collapses as producers don't make enuff money to pay the workers at low prices, and the workers don't make enuff money in wages to buy the product even at the lower prices. There is always a balance to be reached. The same occurs the other way as prices rise and consumption falls. You obviously don't want to change things much, but injecting or taking too much money out of the system which is what excess taxes can do. Taxes take money out of the system. Prices however will rise, causing demand to fall, and profits to be reduced. A vicious cycle ensues, which governments always deny. Their collecting spending they will tell you does not cause inflation. What a crock! This is also why government subsidies and marketing boards have the effect of raising prices. They reduce production as farmers can afford to do well on less, so and prices will rise along the curve. They also effectively increase the virtual money supply in the prodction system so the curve shifts right. It also follows that if you raise production, price falls and consumption increases. If you put more money in the system the diagonal line moves to the right. Prices for instance may not change but consumption will increase. Take money out and the diagonal line moves to the left. This is called the invisible hand as it pushes the line right or left without being seen. Socialists deny it exists. They in fact use an invisible government hand anyway to control prices. They even did that by controlling production in the USSR. What is the difference? There is no difference. Either way you don't let things find a natural balance. You can see the same thing exists for taxes except that is a double curve, or convex upward. As you slide up the taxation ladder on the horizontal, the government revenue declines after awhile. This is called the Laffer curve. There is a maxima in center, near a median tax level. Raise taxes too much and government revenues actually fall. What they do in this country when this happens is they print more money, not realizing that it is the taxes that are choking everything off. EC<:-}