From: mdl@cypress.com (Matt Landrum)
Subject: Re: Tax cuts (is this guy crazy)
Organization: Cypress Semiconductor Southeast Design Center
	<1993Jan22.000154.12259@shearson.com> <1993Jan25.162721.21618@ncsu.edu>
Date: Tue, 26 Jan 1993 00:13:41 GMT

In article <1993Jan25.162721.21618@ncsu.edu> jjprice@eos.ncsu.edu (JEFFREY JAMES PRICE) writes:

   In article <1993Jan22.000154.12259@shearson.com>, pmetzger@snark.shearson.com (Perry E. Metzger) writes:

   |>mdl@cypress.com (Matt Landrum) writes:
   |>>what he said (or my interpretation of it) was that if you believe it's
   |>>the job of the government to stimulate the economy in times of
   |>>recession, government spending is better than income tax cuts, because
   |>>part of the cuts would go in to savings rather than investment.
   |>

   (sarcasm turned on because banks loan businesses money)
   |>And this, of course, would be horrible, as the money just gets piled
   |>up in the back of the bank doing nothing, gathering dust. The banks
   |>get the interest they pay you by printing money or stealing it.
   |>

   So are you saying that those that have a little money left over should just
   hand it over to the government instead of putting it in savings to send 
   there kids to school or but that used car....

If you need to keep your money liquid, put it in a savings account.
If you've got some extra money, invest in a good business (CY on the
NYSE :-) ), or a retirement account, or something (not a savings
account).  There, do I get my fee for financial consultation now?  :-)

I'll try explaining my novice interpretation of a small portion of
Keynes one more time.  This is in regards to deficit spending in order
to stimulate a stalled economy.  I don't believe Keynes ever advocated
people sending their money to the government because the government
was more efficient at spending it (although a lot of people may
disagree with me).  Where did Keynes recommend putting the "extra
money"?  The question was put to Keynes (not in these words) whether
or not the government should give the money back to the people through
tax cuts or would government projects be better for stimulating the
economy.  It was HIS view that government spending would be better
because people would put a substantial portion of the new money into
savings (rather than new business, investment, etc.)  It seems obvious
to me that he didn't take into account how much government bureaucracy
would soak up.  I don't agree with a lot of the Keynes philosophy, but
I don't agree with all of Hayek, Friedman, Knight, ... either.  One
thing for sure is that they all have forgotten a heck of a lot more
about it than I know (especially the dead ones).  I'm willing to play
devil's-advocate, but I would rater take it off-line because I bet
most of these people have seen this argument a hundred times on
sci.econ - and there are REAL live economists on this net who can
explain Keynes much better than I.
--


Matt Landrum, CAD Engineer      | e-mail: mdl@cypress.com
Cypress Southeast Design Center | office: (601) 324-4609, FAX - 4614
1 Research Blvd, Suite 200      | "You can get what you want if you
Starkville, MS  39759           | know how to find it." -- Tower of Power


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