The logic flaw of tax cuts.

[task0778]

The basic tenet of MMT is the idea that the United States government can spend money it doesn’t have by simply borrowing and/or printing more money. The problem with this is inflation, if you pump more money into the economy without a corresponding increase in production of goods and services then the result is rising inflation. And the truth is that the US Gov't does a very poor job of spending money to effectively produce more goods and services, instead they focus on the politics of where to spend money. Since that situation is highly unlikely to change, MMT will not work in practice. Realistically, you simply cannot spend your way to prosperity over the long haul.

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[Toddsterpatriot]

MMT is not a blank check. What MMT states is that a country that has achieved monetary sovereignty has no monetary restrictions. Instead, it faces resource constraints.
The 2007 bailout was in fact the dark side of MMT. Steve Keen and Michael Hudson have argued that instead of bailing out banks the funds could have been used to rescue the debtors by providing a one-time income under the following constraints:
- If the person didn't have any debts the money would be deposited directly into his account
- If the person had any debts the money would be used to pay off the debt.

Regarding government efficiency: yes, the market and the need for profits provide an incentive to become more efficient ( as long as the firms are not a monopoly , monopsomy or oligopoly). Some sectors like electricity, water distribution, and treatment and roads are natural monopolies. I personally don't see any benefit of having them handled over the private sector. Banks have a social purpose: to increase production by expanding the money supply... the unruly behavior of the banking sector baffles me, it just makes me ponder if it is wise to keep it mostly in the private sector.

That said, the real matter for consumers is not the "cost" at which a company produces a good or service , but rather the price at which it sells it on the market.
Privat firms don't always offer their goods and services at a lower price on the market in spite of producing them at a lower cost than their state-run counterparts.

Steve Keen and Michael Hudson have argued that instead of bailing out banks the funds could have been used to rescue the debtors by providing a one-time income under the following constraints:

Why should debtors have been rescued?
How much "one-time income" was the commie (Hudson) pushing for?

 

[Mexicano]

I stated that China is using foreign engineers and you deny it because of China's immigration policy? Engineers and technicians do not have to immigrate to work in China.

China is nothing but American business, American factories, dismantled and shipped to China. Everything in China has been built by Americans or Europeans, and even Russians.

All the technology China uses, is foreign.

I am not denying anything. I am simply stating that the ratio of foreign engineers / national engineers has to be lower than that of the US because of their inmigration policies and the language barrier. The article I quoted states that the foreign-born population is less than 1% , that's a hard figure and there is no way around it.

And yes, the capital goods employed by Chinese companies were provided by Europe and the US and they will remain there in the foreseeable future.
That was part of the Chinese development strategy, I am uncertain of why the US and Europe were so eager to play along with it. Probably because they weren't expecting a peer competitor in such a short time.

 

[Mexicano]

The basic tenet of MMT is the idea that the United States government can spend money it doesn’t have by simply borrowing and/or printing more money. The problem with this is inflation, if you pump more money into the economy without a corresponding increase in production of goods and services then the result is rising inflation. And the truth is that the US Gov't does a very poor job of spending money to effectively produce more goods and services, instead they focus on the politics of where to spend money. Since that situation is highly unlikely to change, MMT will not work in practice. Realistically, you simply cannot spend your way to prosperity over the long haul.

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The basic tenet of MMT is the idea that the United States government can spend money it doesn’t have by simply borrowing and/or printing more money.

No, not really.
The basis of MMT is accounting and sectoral balances.

The problem with this is inflation, if you pump more money into the economy without a corresponding increase in production of goods and services then the result is rising inflation.

Not necessarily. Inflation is a complex phenomenon.

M2/Gross Domestic Product | FRED | St. Louis Fed

Graph and download economic data for M2/Gross Domestic Product from Q1 1947 to Q2 2023 about GDP, USA, M2, and monetary aggregates.

fred.stlouisfed.org

Notice how the m2 money to gdp went from 0.5 in 2007 to 0.7 in 2019 and inflation was low.
Yes, then we got covid, lockdowns, supply chain problems, and an increase in money supply.... then, naturally we had inflation... worldwide, supply chains broke down during the lockdown, demand went up after it ended and we got inflation. In normal circumstances inflation can be monitored and spending controlled before it gets out of hand.

And the truth is that the US Gov't does a very poor job of spending money to effectively produce more goods and services, instead they focus on the politics of where to spend money.

Yes, this is a real problem, which is not exclusive of US government. But I see it as a problem related to planning, governance, corruption, and accountability, not as an intrinsic problem of governments.
The biggest flaw of MMT is that it can only look at the "money" part of the economy and it is utterly ill-prepared to cope with the resource part. It is mostly an accounting framework for economics. So all the flashy things its advocates claim can be achieved require other schools of the economy to be sustained. MMT is just about accounting and monetary flows. It can't really say what to do with the money created by banks and the central bank, because it is a purely monetary framework. However, it will tell you what will happen if you alter the monetary flows or if you reduce the amount of money... and even at that there are disagreements due to the behavioral nature of economics.
At one point I argued with Warren Mosler that FED hikes would create a recession because it would trigger private debt deflation and a contraction of money supply.
He answered:
"I see no evidence of that? The increased deficit spending adds that many net financial assets and income that supports the private credit structure."
... I guess we'll find out soon enough.

 

[Mexicano]

I stated that China is using foreign engineers and you deny it because of China's immigration policy? Engineers and technicians do not have to immigrate to work in China.

China is nothing but American business, American factories, dismantled and shipped to China. Everything in China has been built by Americans or Europeans, and even Russians.

All the technology China uses, is foreign.

Apparently, up to 2011 ( 2001 +5 college years + 5 years of practice) China needed foreign engineers. It is now having massive enrollments and this doesn't seem to be the case any long.
This begs the question: when did you perform your nuclear project with China?

Future Tech dominance - China outnumber USA STEM Grads 8 to 1 and by 2030 15 to 1 | NextBigFuture.com

The World Economic Forum reported that China had 4.7 million recent STEM ( science, technology, engineering, and math) graduates in 2016. India, another

www.nextbigfuture.com

 

[Blues Man]

That's a marginal tax... only the income above 120K would be taxed at 50%. The rest of the income below 120K gets taxed at a lower rate.
...and yes.

You don't need to tell me how marginal tax bracket work.

I am aware

And yes you must be high to think that the fucking government has a right to confiscate 50% of any portion of a person's income.

The logic you need to question is how the government spending more than it takes in is acceptable

 

[elektra]

Apparently, up to 2011 ( 2001 +5 college years + 5 years of practice) China needed foreign engineers. It is now having massive enrollments and this doesn't seem to be the case any long.
This begs the question: when did you perform your nuclear project with China?

Future Tech dominance - China outnumber USA STEM Grads 8 to 1 and by 2030 15 to 1 | NextBigFuture.com

The World Economic Forum reported that China had 4.7 million recent STEM ( science, technology, engineering, and math) graduates in 2016. India, another

www.nextbigfuture.com

How many nuclear power plant "start-up" engineers is China using right now.

Foreign engineers and USA technology built everything in china. With a bit of tech from other countries.

 

[Mexicano]

You don't need to tell me how marginal tax bracket work.

I am aware

And yes you must be high to think that the fucking government has a right to confiscate 50% of any portion of a person's income.

The logic you need to question is how the government spending more than it takes in is acceptable

Because the economy is a set of interleaved balance sheets : the government's negative equity is the positive equity of the other sectors.
Furthermore, the government is the only sector that can sustain being in negative equity for an indefinite time.

 

[Flash]

While I can understand how tax cuts on the middle class and small to medium businesses can help the economy, I am reluctant regarding giving tax cuts to large corporations. The main reason is that history has proven they engage into speculative investment ( derivatives, stock exchange, money markets).
These activities hardly help the economy or consumption.
The only way around this problem is to either tax capital gains or a tax on wealth.

Now just a definition of large corporation : a corporation with sales exceeding one billion dollars.

One thing about you stupid Moon Bats. You don't know jackshit about Economics.

Every cent that a corporation pays in a tax comes from the revenue of the sale of goods or services.

In other words the corporate tax is just another tax on the people that buy the goods and services.

American people pay the tax. The despicable trillion dollars a year in the filthy corporate tax that we all pay for when we buy something made by a corporation, which is most of everything.

If you raise taxes on corporation you are taking money out of the pockets of Americans, that are already paying too much money for the cost of government, which is bloated and enormous.

The answer is never to tax more but to spend less.

 

[Blues Man]

Because the economy is a set of interleaved balance sheets : the government's negative equity is the positive equity of the other sectors.
Furthermore, the government is the only sector that can sustain being in negative equity for an indefinite time.

Government has no equity.

Government has no worth of its own. Everything to government owns is paid for by the people

The more the government takes from the people the more in interferes with the economic health of the people.

Just take Social Security as an example. Social Security is designed to keep people poor and dependent on the government because the last thing the government wants is a large portion of the population to be financially independent.

 

[Mexicano]

Government has no equity.

Government has no worth of its own. Everything to government owns is paid for by the people

The more the government takes from the people the more in interferes with the economic health of the people.

Just take Social Security as an example. Social Security is designed to keep people poor and dependent on the government because the last thing the government wants is a large portion of the population to be financially independent.

Any entity that performs accounting operations has equity, at least from the accounting point of view.
All developed countries have some form of social security and universal healthcare ( except the US).

 

[Mexicano]

One thing about you stupid Moon Bats. You don't know jackshit about Economics.

Every cent that a corporation pays in a tax comes from the revenue of the sale of goods or services.

In other words the corporate tax is just another tax on the people that buy the goods and services.

American people pay the tax. The despicable trillion dollars a year in the filthy corporate tax that we all pay for when we buy something made by a corporation, which is most of everything.

If you raise taxes on corporation you are taking money out of the pockets of Americans, that are already paying too much money for the cost of government, which is bloated and enormous.

The answer is never to tax more but to spend less.

Oh, and where do you think the money the corporation recorded as profits came from?

 

[Flash]

Oh, and where do you think the money the corporation recorded as profits came from?

Taxes are a cost of business that are passed on to the people that buy the goods and services.

Like I said, you dumbass Moon Bats don't know jackshit about basic Economics.

 

[Mexicano]

Taxes are a cost of business that are passed on to the people that buy the goods and services.

Like I said, you dumbass Moon Bats don't know jackshit about basic Economics.

That's not what I asked. I asked: where does the money come from?
You must have noticed money requires customers to pay for products, and these customers require a wage. It is a circular relation, clearly money doesn't come from households or businesses, so think: where does money come from ?

 

[Flash]

That's not what I asked. I asked: where does the money come from?
You must have noticed money requires customers to pay for products, and these customers require a wage. It is a circular relation, clearly money doesn't come from households or businesses, so think: where does money come from ?

You are being dense as hell.

I'll make it simple:

Revenue - expenses = profits.

Tax is a business expense. Revenue is what the consumers pay. Taxes are part of expenses and are factored in with the price of the goods and services, just like all other expenses. Hence, the tax is on the consumer.

Any more stupid comments?

 

[task0778]

That's not what I asked. I asked: where does the money come from?
You must have noticed money requires customers to pay for products, and these customers require a wage. It is a circular relation, clearly money doesn't come from households or businesses, so think: where does money come from ?

Money comes from several places, right? 1st of all, the US Treasury can print (create) new currency and the Fed creates money by purchasing securities on the open market and adding the corresponding funds to the bank reserves of commercial banks. The banks loan out money to individuals, groups, and businesses/corporations who make a profit and that is also new money. And the gov't creates money in the sense that they pass spending bills for various programs and policies.

BTW, wages do come from businesses.

 

[Blues Man]

Any entity that performs accounting operations has equity, at least from the accounting point of view.
All developed countries have some form of social security and universal healthcare ( except the US).

The US has no equity in anything.

With the debt of 32 trillion dollars, if you want to look at the country as a business , the US has a negative net worth.

And so what if other countries have things we do not?

If you want to live in another country feel free to do just that.

Social security is designed to keep people poor.

If people were able to save that money the government confiscates for Social Security , even a person making a modest average lifetime income would retire with far more money than Social Seciruity could ever pay them AND they would have money left to leave to their heirs. But like I said that's the last thing any government wants

 

[Mexicano]

You are being dense as hell.

I'll make it simple:

Revenue - expenses = profits.

Tax is a business expense. Revenue is what the consumers pay. Taxes are part of expenses and are factored in with the price of the goods and services, just like all other expenses. Hence, the tax is on the consumer.

Any more stupid comments?

You still haven't answered. So it is clear you are absolutely clueless.
Money is created in two ways
a) Through government spending; this requires a loan from the central bank or by issuing bonds. When the government spends it creates deposits in the bank accounts of the recipients.
b) When banks issue a loan, but this money is temporary because as loans are repaid the money is destroyed.
So the "hard" money comes from government spending; as I said the governments negative equity is the positive equity of the other sectors.

 

[Blues Man]

You still haven't answered. So it is clear you are absolutely clueless.
Money is created in two ways
a) Through government spending; this requires a loan from the central bank or by issuing bonds. When the government spends it creates deposits in the bank accounts of the recipients.
b) When banks issue a loan, but this money is temporary because as loans are repaid the money is destroyed.
So the "hard" money comes from government spending; as I said the governments negative equity is the positive equity of the other sectors.

Spending does not "create" money.

Loans do not "create" money

Bank Loans leverage money so as to do more with the same amount there is no money "created" what is created are assets and value.

 

[Flash]

You still haven't answered. So it is clear you are absolutely clueless.
Money is created in two ways
a) Through government spending; this requires a loan from the central bank or by issuing bonds. When the government spends it creates deposits in the bank accounts of the recipients.
b) When banks issue a loan, but this money is temporary because as loans are repaid the money is destroyed.
So the "hard" money comes from government spending; as I said the governments negative equity is the positive equity of the other sectors.

You are so damn confused it is pathetic.

You little Leftest shits think raising taxes is always the answer to everything.

You always want to increase corporate taxes because like all dumbass Leftest assholes you hate those evil corporations. You were taught that in your commie indoctrination classes.

The only thing is that there is really no such thing as taxing corporations because the consumers of the goods and services supplied by the corporations are the ones that have to pay the tax.

Instead of starting a thread on why we should be increasing taxes on corporations you should be advocating decreasing government spending so that nobody has to pay more taxes.

You think you could do that?