If Bush is considered 'What is Republican'...

[Ned]

Imran, you seem to agree that deficits stimulate the economy and that surpluses drain liquidity from it, but at the same time deny that they contribute to the cause of recessions or depressions even after looking at history and seeing that every depression has followed a period of budget surpluses and every recession has followed a period of reduction in the deficit.

You leap from "contribute" and "cause" to suggest that they must be the sole and exclusive cause in order for my position to be right. Imran, your method of arguing your position is ludicrous.

[Ned]

Originally posted by Kidicious


You can not substitute the words 'tax revenue' into the place of the word 'taxes' and make this paragraph true. Tax revenue can increase without increasing taxes, when disposable income has increased, not decreased. This is really the only case that I know of when surpluses have occured.

In order to understand my point, imagine that all government revenue was financed from borrowing from foreign banks in a given year. Government expenditures that year would add purely to demand. As there would be no tax revenue, there would be no deduction in disposable income.

You would agree, would you not, that such a system would be highly stimulative of the private economy.

Now, the next year, the government spends the same, but gets all its revenues from taxation. The demand is the same, but the taxes reduce disposable income by the amount of the taxes.

That was the only point I was trying to make.

[Kidlicious]

Originally posted by Ned
Kid, deficits add to DI; surpluses subtract. They have an effect and people need to understand this.

I believe the data that you have presented shows DI increasing with surpluses.

Originally posted by Ned
Surpluses are highly deflationary and have caused every major depression we have experienced.

Surpluses have a strange, but probably minimal, effect. Some economists think they might even be inflationary. The surplus is not taken out of the economy, the debt is. The cash is injected into the economy.

[Ned]

Originally posted by Kidicious

I believe the data that you have presented shows DI increasing with surpluses.

Surpluses have a strange, but probably minimal, effect. Some economists think they might even be inflationary. The surplus is not taken out of the economy, the debt is. The cash is injected into the economy.

Debt is money.

[Kidlicious]

Originally posted by Ned


In order to understand my point, imagine that all government revenue was financed from borrowing from foreign banks in a given year. Government expenditures that year would add purely to demand. As there would be no tax revenue, there would be no deduction in disposable income.

You would agree, would you not, that such a system would be highly stimulative of the private economy.

Now, the next year, the government spends the same, but gets all its revenues from taxation. The demand is the same, but the taxes reduce disposable income by the amount of the taxes.

That was the only point I was trying to make.

But the surplus didn't result from a new tax, only tax revenue increased.

[Kidlicious]

Originally posted by Ned


Debt is money.

Debt is a less liquid form of money. It can not be traded for goods and services. That makes a huge difference in economic realities.

[Ned]

Originally posted by Kidicious


But the surplus didn't result from a new tax, only tax revenue increased.

I'm sorry Kid. We are not communicating. Nothing in the post you replied to mentioned a surplus. What are you talking about?

[Ned]

Originally posted by Kidicious


Debt is a less liquid form of money. It can not be traded for goods and services. That makes a huge difference in economic realities.

Huge?

Not true. People with large amount of easily disposible assests like bonds or stocks in effect have large amounts of cash.

[Kidlicious]

Originally posted by Ned


I'm sorry Kid. We are not communicating. Nothing in the post you replied to mentioned a surplus. What are you talking about?

Oh. Sorry. The most resent real surplus did not result from a new tax policy, only an increase in tax revenue, which itself resulted from increased disposable income. In your example a new tax policy was created which dragged the economy.

[Ned]

Kid, agreed. But as the deficit turned into a surplus (due to increases in DI), the surplus drained DI, demand stalled, profits plummeted, the economy stagnated, and the stock market declined to reflect the new profit situation.

The whole concept that we can stimulate the economy by reducing the deficit is staggeringly ignorant, IMHO.

[Kidlicious]

Originally posted by Ned
Kid, agreed. But as the deficit turned into a surplus (due to increases in DI), the surplus drained DI, demand stalled, profits plummeted, the economy stagnated, and the stock market declined to reflect the new profit situation.

I guess that would be possible if the income tax brackets were very progressive. That is, if individual's disposable income actually declined as they entered higher tax brackets. The're not that progressive though.

Originally posted by Ned
The whole concept that we can stimulate the economy by reducing the deficit is staggeringly ignorant, IMHO.

I tend to disagree with it also, but there are cases where raising taxes doesn't harm the economy and may slowdown inflation.

[Imran Siddiqui]

You leap from "contribute" and "cause" to suggest that they must be the sole and exclusive cause in order for my position to be right.

Since when? I'm saying that surpluses don't cause recession AT ALL. Not just a small bit, not just a tiny bit... but at all! Surpluses are simply taking in more revenues than costs, and are usually accomplished by good times and people getting more money.

there are cases where raising taxes doesn't harm the economy and may slowdown inflation.

Like the Clinton tax increases... and I wonder who was arguing we need to balance the budget to stimulate the economy? The economy is growing slowly but surely and we are ready for our next boom. We can raise taxes on the top 1% now and suffer minor effects, like the Clinton tax increases of '93.

[MRT144]

Imran, im with you. If the republican party lived up to what it stood for and what Dub said he was going to do, then maybe id vote for them.

Has spending decreased under the president? NO! Is that what he said he stood for? YES! Is he living up to what he said he was going to do? NO !

Fool me once shame on you, Fool me twice shame on me

[Ned]

Just so we are clear, Imran denies that deficits stimulate the economy by adding to DI and that surpluses ****** it reducing it.

Does anyone agree with Imran. Anyone?

[MRT144]

Ned, youre an idiot. thats not what hes saying.