Newsgroups: misc.headlines,talk.politics.misc,alt.activism,sci.econ
Subject: Re: Boom Boom Boom Boom :)
From: demon@desire.wright.edu (Stupendous Man)
Date: 27 Aug 92 11:25:25 EST
Distribution: usa
Organization: Demonic Possesions, Inc.
Summary: "cycles"

In article <1992Aug27.043330.11723@pony.Ingres.COM>, garrett@Ingres.COM (QUOTE OF THE YEAR) writes:
> In article <183238@pyramid.pyramid.com>, pcollac@pyrnova.mis.pyramid.com  writes...
...
>> 
>>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.

	The former did not cause the latter.

> 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. 

	But the revenue DOES come in.  Government continues to spend actual
income PLUS another 50%.

> 	The bigger problem: The deficit increases while the 
> entrepreneurs build and profit.

	Actually the government soaks up capital (the debt) preventing the
economy from continuing to grow.

> 	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, 

	The poor suffer more from recessions than they do buy budget cuts. 
Growth in the economy provides more economic opportunity for (you guessed it)
the poor to exploit.

	See "derailing" part 3.  Mexico is providing economic opportunity for
the poor through economic growth, and not through more government programs.

> 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.

	Ok, but the real linchpin is unrestrained government spending, and not
the tax cuts.

> 	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.

	Pretty close, actually.

Brett                                                      
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