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Originally posted by Dagnabit
You're looking at real productivity growth numbers there, not monetary rates of return. Apples/Oranges.
The whole idea behind borrowing money (except when the government does it) is that you can use that money to build something more useful. The whole idea about the private money world is that people who can't leverage money well give money to people who can.
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Government, like everyone, pays too much for the money they borrow - as they should. And government gets money at better rates than anyone else! IOW loans only enrich the creditors at great expense to the debtor - be it government or the car buyer who did not save.
You are on the right track. If one lived off the fat of the land (did not save), then one must be punished - pay high interest rates to get the equipment necessary for living - the car loan. Paying off all debts today has a better 'rate of return' (ROR) than does a tax cut followed by more bond interest payments.
Tax cut nonsense from anti-humanity hyperster continues today. They now claim that 100% of the tax cut will be used to invest in the economy - a lie. If Americans are investing 4% of their income in capital investments, then only 4% of the tax cut will also appear as capital. Let's see, 4% of a $100 tax cut means another $6 increase of government debt. In the meantime, only $4 of that tax cut is invested resulting in a 'return on investment' (assume ROI of 10%) of maybe $0.40. Of that $0.40, government received $0.10 some years later when the investment eventually is cashed out. Those are not numbers that stop recessions. Those are numbers that say 'Recession' years later. How concidental. That is what so many previous tax cuts did - create recessions later by forcing up interest rates and creating unproductive economic activity.
With that extra $100 in the economy, Greenspan now must maintain higher interest rates - less jobs and less capital investment - just another reason why tax cuts do not create long term economic growth.
Provided was not apples and oranges. People actually think 10% and 20% growth rates in the stock market represent economic growth. If the economy only grows at 4%, then the stock markets, et al, must crash back from 20% to average near 4% growth - because that is what the economy grows at. $100 in today's economy only produce 1.3% or 3.2% economic growth - regardless of irrational exerburance in currently ending in the markets.
IOW all $100 tax cut spent in the economy will only return about 1.3 or 3.2% or $1.30 to $3.20 while government pays creditors another $6. These are not anti-recession numbers.
It is 'Apple and Oranges' to ignore what the real ROI on $100 will be in the economy. During boom times, we actually earned as a country growth of about 6%, or $6 for every $100 out there. Those were extraordinary times.
Good times are over. The stock market took 20% profits. We now pay for our irrational exuberence as, for example, Cisco stock price must drop to about 1/2 today's closing price - a price today that dropped 20% from last week. The economy did not grow at 20%. The economy only grew at something like 6%. Irrational exerburance will be punished in this and future years. Once it is all done, the average ROI on last years $100 will be only 6%; and will be much less in the following years as growth rates return to 1-3%. Creditors will get greater ROI and debtor will pay $100,000 over ten years for new cars purchased using car loans.
Yes, creditors will have ROI higher than growth rates only because others will suffer growth rates less than the economic 1.3% and 3.2% growth rates.
Maybe 4% of a Bush $100 tax cut will be invested. And that $4 will only return about $0.10 in economic growth while government pays another $6 on debts that $100 did not eliminate. IOW the tax cut will only enrich the rich creditors at everyone else's expense. They forget to tell you that in Daily News interpretations. They try to tell you that there is no realtionship between economic growth (1.3% and 3.2%) and the ROI on tax cut money. Hoowey. They have everyone worshipping a new Reagonomic money game.
The only thing that will avoid a recession - innovation. Tax cuts will only encourage a recession some years later.
We don't have a shortage of capital. So why is Bush claiming that a tax cut will create more Jobs? Because many of use are so poorly educated as to believe that capital creates jobs. We know innovation only creates jobs. But a politican says otherwise, so bow down and worship the burning Bush... or see the tax cut for the scam and money game that it is.