From: garrett@Ingres.COM (QUOTE OF THE YEAR)
Newsgroups: misc.headlines,talk.politics.misc,alt.activism,sci.econ
Subject: Re: Boom Boom Boom Boom :)
Summary: Lots of talk
Date: 27 Aug 92 04:33:30 GMT
Distribution: usa
Organization: ASK Computer Systems, Ingres Product Division
News-Software: VAX/VMS VNEWS 1.4-b1

In article <183238@pyramid.pyramid.com>, pcollac@pyrnova.mis.pyramid.com  writes...
>In article <1992Aug26.040745.3040@pony.Ingres.COM>, garrett@Ingres.COM
>(QUOTE OF THE YEAR) writes:
>|> 
>|> This isn't meant as a flame, but I seem to remember that after everyone
>|> one these "boom" periods there was a severe recession. 
>|> 
>|> 1920's	followed by the 30's.
>|> 64-69   followed by stagflation in the 70's (I remember a bad recession
>|> 					in 73-74, but I think there was 
>|> 					also one before then)
>|> 83-89	followed by the present recession.
>|> I'm not sure of the exact date, but there was a depression in the
>|> 1890's as well.
>|> 
>|> Does anyone have a theory on this?
>|> 
>|> -Garrett
> 
>Yes.  It's called the "business cycle," a corollary to a more general
>understanding of the action-reaction of forces known as "karma." The
>higher the highs, the lower the lows.  Stupendous man is simply addicted

 I think we have now completed the circuit on economic theory. Here's a
brief summary.
1) The recessions weren't really all that bad, except for the 30's.
	(When the evil government took comtrol)
2) The evil government is totally responsible. The recessions happened
	when the government interfered with the economy.
3) The evil businesses are responsible because they are greedy and short-
	sighted.
4) The evil consumers are responsible because they are greedy and short-
	sighted.
5) And now, it's the evil and disembodied "business cycle".

	All these theories, and yet not a single person saw a 
correlation between the tax cuts and the following recessions. Amazing.
Well, I'm going to advance a theory that I am sure everyone will 
disagree with, on both sides. Here goes...

	The government cuts taxes, therefore allowing more money
to circulate in the economy. Hence, economic growth.
	The problem: The government expects the growth to bring
in more revenue and doesn't cut its spending enough to compensate
for the revenue, that in reality, doesn't come in. 
	The bigger problem: The deficit increases while the 
entrepreneurs build and profit.
	The crises: The deficit increases to the point that the 
banks get stretched and some start to fail as capital dwindles. The
economic growth starts to slow slightly.
	The "solution": The government realizes that it must cut
the deficit somehow. It already made some cuts in social spending
early on to partially compensate for the tax cuts. They can't cut
more without the poor suffering, and besides the economy is still
growing. So it decides to raise revenue. (High tariffs in 29', user
taxes in 90')
	The conclusion: The tax increases just increases the credit
crunch. More banks fail, the economy stalls, and the government can't
put money into the economy because it is heavily in debt. Hence, 
recession city.

	That's right, someone with no economic schooling has just
put an inflamitory post that will be sure to anger every red-blooded
American. So start flaming.

-Garrett

Disclaimer: My opinions are not reflected by my employer.
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