Help Please

Discussion in 'Economy' started by 5ive, Feb 9, 2009.

  1. 5ive
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    5ive Rookie

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    Couple of economy questions to be answered would be very helpful

    1.) According to the Supply-Side Theory, what is the cause of recession in the capitalist economy?

    2.)According to the supply side theory, what fiscal, monetary policies should government engage in to stop recession?
     
  2. Truthmatters
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    Truthmatters BANNED

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    1.) lack of tax cuts.

    2.) Tax Cuts.
     
  3. editec
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    editec Mr. Forgot-it-All

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    Near as I can tell of the hodgepodge they think passes for thinking, everybody but them is responsible for this recession.

    The fact that they have been in charge of this economy is, apparently, not relevant to their responsibility for its collapse.

    More massive tax cuts for the superwealth and the high hat to the other 80% of the population, same as ever.
     
  4. 5ive
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    5ive Rookie

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    Alright thanks Guys.

    What would those answers be if you substitued Supply Side Theory with the Cainsium theory. Don't know how you spell it.
     
  5. auditor0007
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    auditor0007 Gold Member

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    Keynesian; spend as much money as the government can above actual revenues to create a false sense of well being and worry about paying for it at a later time.

    Both have flaws and neither should be looked at as an end all way of influencing the economy. Overtaxation of the wealthy is terrible for investment, yet the wealthy need to pay a fair share of taxes, otherwise there won't be enough revenue to even allow for basic services. Overspending on the part of government must be paid for at some point, so you can't just keep passing the buck down the line.

    Generally, lower taxation and fiscal responsibility are the ideal, but there are times when some excess government spending can be good, so long as it doesn't get out of control. Lately, it's been out of control and it's only getting worse.
     
  6. Kevin_Kennedy
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    Kevin_Kennedy Defend Liberty

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    Instead of Keynesian or Supply-Side you should look at the Austrian way which says you need to cut taxes for everyone, cut government spending, and allow the market to correct itself.
     
  7. Andrew2382
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    Andrew2382 Gold Member

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    do your own homework for your economics class!
     
  8. Richard-H
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    Richard-H Gold Member

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    I'm not quite sure what Keynes thought was the cause of recessions. I do vaguely remember that one factor was what he called 'leakage', which was the simple mysterious disapperance of some wealth from the economy, but I don't think that he believed that 'leakage' was large enough to cause recessions and depressions.

    However, as far as government policies for rectifying a recession or depression, his theory was basically that during a recession/ depression a governement should tax the wealthy, and use deficit spending to funnel the money to the 'masses' of people. This in turn would seed the economy through consumer based spending.

    On the otherhand, a BIG part of Keynesian theory, which is pretty much ignored, is that during economic boom times, the governement should NOT lower taxes and reduce spending, using the surplus to pay off the deficit. Only after a good part of the deficit is paid off, the governement should lower taxes.

    Unfortunately, the latter part of this has not been followed (except for the 1950- early 1960s, when JFK lowered taxes after a considerable amount of the deficit had been paid).

    Our biggest problem is that during economic boom times, we have not paid off the deficit, but have instead continued deficit spending, thereby completely screwing up everything. Now we're paying for it.
     
  9. wimpy77
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    wimpy77 Member

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    nicely put
     

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