Bush's tax cut is a good one

[tw]

Originally posted by Dagnabit
"A private investment typically results in only about 1/2 return compared to interest payments on government debt."

I'm skeptical, because otherwise there would be no reason to have stock exchanges and everyone would just buy treasury bonds. But assuming that you're on point --

Look at the growth rates for the world: Austrailia 2.6%/4.2%; Austria 1.2%/1.9%; Belgium 2%/3.2% ... US 1.4%/3.5%; and Euro area 2.8%/3.4%.

IOW for every dollar invested in the US, the growth rate return was 1.4% in the past three month and 3.5% for the year. But T-bills must pay their creditors about 6%. Are growth rates suddenly going to increase to 10% because we cut taxes and sell more T-bills? Of course not.

You may get an 8% ROI on a good, ioslated investment in a new, upcoming growth investment. But overall, money including depreciations, obsolecence, bankruptcy, etc all taken into account, the US and any other country grows at well less than 6%.

When debts are high, only the rich prosper. They are the creditors who do nothing but live off money they have loaned/invested. In good times, all classes prosper because there is less demand on capital - interest rates fall. Interest rates, properly controlled, are a measure of capital demands vs capital availability. Bad times are characterized by high interest rates.

If government does not pay down its debts, then there is a shortage of capital - higher interest rates. When government pays down their debts, then capital is freed - made available to all - lower interest rates. The best investement anyone can make - government or private individual - is to first pay down the debts.

Look - how does a man get rich? He borrows no money on disposable items. For example, he has no car loans and no outstanding balances on credit cards. Correct. You will be less wealthy and less well off if you borrow money to buy a disposible item such as a car (or lease it).

There are people who play money games. They take out car loans, then use the money saved to buy securities. Go figure. They make 8% on their investments and pay 12% on a car loan? Typical bad financing. Before you invest in anything else, first invest in yourself - pay off your debts. Same applies to government and economy.