Stimulus Spending

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Martin Hash
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Stimulus Spending

Post by Martin Hash » Tue Jan 11, 2011 6:41 am

The disconnect between how economics really works and how most people think it works is astonishing, frustrating, and sad. You cannot judge Government spending based on how a family would manage its own money because Governments are responsible for everybody's Best Interests. In fact, stimulus spending is simple - any money Government spends ends up in the bank accounts of Americans and should be considered a loan to be repaid through taxes. Obviously, citizens who have no money in their bank accounts HAVE NONE OF THE LOAN MONEY, while people with lots of money in their bank accounts HAVE ALL OF THE LOAN MONEY.

It doesn't make any difference what Government spends the money on - only that the money does NOT leave the country. Money put into banks and loaned outside of America is also busting the stimulus. That is why individual States cannot engage in stimulus spending because they cannot ensure that the money stays within their borders. The massive $500,000,000,000 a year Trade Deficit has eaten almost all of the Obama stimulus, making it mostly ineffective. Tariffs must be used to offset the Trade Deficit if stimulus spending is to be successful in reviving an economy.

Also, tax rates must balance with the budget: loan out = taxes in. We have empirical evidence that a 39.5% top personal tax rate, as experienced during the Clinton years, can balance the stimulus-repaying cycle, and that a 35% top tax rate (the "Bush Tax Cuts") cause deficits, and are therefore unsustainable. People who argue that Government is taking THEIR money are either confused or thieves because people should pay back loans.