Reaganomics is Dead

Discussion in 'Economy' started by Toro, Nov 7, 2009.

  1. Toro
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    Toro Diamond Member

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    According to one economist who worked for Reagan and Bush I.

    Reaganomics is Dead (Long Live Reaganomics) | Capital Gains and Games
     
  2. PLYMCO_PILGRIM
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    PLYMCO_PILGRIM Gold Member

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    What good are tax cuts when people have no income to tax? There is tons of income still being made by many people in small business, hell if my boss got a 2% tax break he would open up the 3rd shop and give 4 more people full time gainful employment. I dont buy that line AT ALL. I have personal experience that contradicts this statement.

    I think the guy does make some other good points such as applying a great depression spending model to todays crisis being a bad idea. I hope he is right that a strong recovery is right around the corner. I just dont know if the way we are creating the recovery will be sustainable.
     
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  3. Toro
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    Toro Diamond Member

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    I believe I read somewhere that when the Bush White House sent out the second round of stimulus checks a few years back, people saved 85% of it. That's good to help you and I repair our balance sheets (effectively transferring our debts to the balance sheet of the federal government), but it did nothing to increase the monetary velocity in the economy. That was his point. When money circulates at a slower rate in the economy, economic activity declines. You want policies that increase monetary velocity. Instituting policies which merely transfer debt from the balance sheet of the consumer to the federal government does not do much good.
     
  4. JakeStarkey
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    JakeStarkey Diamond Member Supporting Member

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    If the market gains are made on the back of firing employees, in order to increased dividends, rather than growing the business, you may be right, Plymco_Pilgrim.
     
  5. garyd
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    garyd Senior Member

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    Yet if you borrow millions either from overseas or from the banks here and raise taxes where the hell does the private sector come by the money to expand and hire?

    The real answer to the question why aren't the banks loaning out more money? is the government is borrowing it all.
     
  6. Chris
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    Chris Gold Member

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    Mortgage interest rates are at 5% and money is readily available.
     
  7. garyd
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    garyd Senior Member

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    Not for small busineses it isn't. And that's the problem.
     
  8. Chris
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    Chris Gold Member

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    But I thought the "free market" was supposed to take care of all our problems.

    There are hundreds of banks in this country.
     
  9. garyd
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    garyd Senior Member

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    Everyone ruled with a cast iron hand by the Fed. There really hasn't been a true free merket when it comes to banking since the Great Depression. When the government is borrowing all the money to make sure people can buy cars and homes there isn't much left to do much else.
     
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  10. Oddball
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    Oddball BANNED Supporting Member

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    The problem with declaring the Reagan economic model dead is that spending was never cut.

    When anyone accomplishes both tax and significant spending cuts, then we can sit around arguing the merits of the results.
     

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