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Some might claim that tax cuts would stimulate the demand side of the equation, but this may not be the case for the following reason: there would be a transfer of purchasing power from the government to individuals and businesses, which under normal circumstances would spike demand, consumption, and employment. Under an uncertain climate, however, it makes infinitely more sense for individuals and corporations to save their money. It makes more sense for people to save their purchasing power rather than to utilize it; the economy remains in the tank because demand is not stimulated and unemployment remains high and even higher, because the government would have an incentive to keep spending - so that unemployment stabilizes. It does not mean that government knows hows to spend money better than people, it's simply a matter of the incentives they face. For people and businesses, what makes sense is to save their money, it's not up to them to bring down the unemployment rate by spending and creating demand - it does not make sense for the individual to do this under the current circumstances. But it does make sense for the government to do so - because otherwise, if unemployment is high or rising, it gets voted out of office.
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This is precisely why I never got into Econ 101....boooorrrrrriinnnnnggggg.
I just can't comprehend why it's okay for government to spend itself into infinite debt, in your scenario.
It's only okay because we, as a people, have accepted the fact government bureaucracies (I always need spellcheck for that word) aren't designed to make a profit. Their sole reason for existence is to exhaust their budget so they can get a bigger one the next year. They're designed to become bloated and inefficient.
Why can't we change their business model to better mirror a business?
I mean we ARE supposed to be a free-enterprise-capitalist society, right??
I challenge any of these beltway knuckleheads to reconcile a P&L statement. The majority of them wouldn't recognize one if it crossed their desk.
For far too many generations we've allowed them to bloat and grow too big for our own good.
The only, and I do mean ONLY, way government can create jobs is if they realize a profit.
It makes zero sense for me to hire 100 new people if I don't have the money to pay them. The only way to afford to pay them would be to raise my prices to such an astronomical level as to drive myself out of competion and into bankruptcy.
Why do we allow such irresponsible behavior from our government, banks, and automakers?
So what if they fail. Lesson learned. Bet they won't repeat that behavior.
"We can't let our government go into default"
Why not? Let China start calling in on some of their loans. Maybe it'll wake somebody up to actually DO something besides campaigning.
When entire blocks of land, in the USA, starts getting taken over by China, et.al. somebody will come up with the cash to stop it.
If not? Lesson learned. Bet ya they won't repeat that behavior again.