Economy Questions

[mikegg]

Questions:

1. If the super rich don't get taxed as much, do they really reinvest their money and help drive the economy? AKA the trickle down effect?

2. Is it really better for the overall economy to tax corporations more?

3. Does more money in the pockets of the super rich help the overall economy more or money in the middle class folks?

4. Are there graphs or data that show economic growth between republican presidents and democratic presidents?

 

[drebo]

Questions:

1. If the super rich don't get taxed as much, do they really reinvest their money and help drive the economy? AKA the trickle down effect?

2. Is it really better for the overall economy to tax corporations more?

3. Does more money in the pockets of the super rich help the overall economy more or money in the middle class folks?

4. Are there graphs or data that show economic growth between republican presidents and democratic presidents?

1. Where do you think banks are supposed to get the money they loan to other people? When a person has money in a savings account or money market account, that's an investment. The rich don't keep their money in a mattress.

2. No. It's better for the economy to let people keep as much of their own money as possible.

3. See number one.

4. Of course, and I think they all seem to indicate that a mix (cross control between Congress and White House) provides the best economic growth. The reason for that is pretty simple...something about policies being much more difficult to pass. That's the past, however...in the present, both sides have the same goal (eradicate the middle class and rule the serfs,) so it doesn't make much of a difference either way.

Also: posting in a troll thread.

 

[mikegg]

1. Where do you think banks are supposed to get the money they loan to other people? When a person has money in a savings account or money market account, that's an investment. The rich don't keep their money in a mattress.

Interesting... not a troll thread by the way. I've always pondered about these questions.

Let say there is $1. Is it better for the economy if one person keeps all of that money in a savings account or is it better if 10 people each have 10 cents to put into 10 individual savings accounts?

What if the rich person doesn't spend the $1 in the next 2 years but the 10 people spends their 10 cents share on each other's small businesses?

 

[momeNt]

Interesting... not a troll thread by the way. I've always pondered about these questions.

Let say there is $1. Is it better for the economy if one person keeps all of that money in a savings account or is it better if 10 people each have 10 cents to put into 10 individual savings accounts?

What if the rich person doesn't spend the $1 in the next 2 years but the 10 people spends their 10 cents share on each other's small businesses?

That's not even Robinson Crusoe economics, I don't even.

Come up with a better example. If this is your question after you profess to "always ponder" then you need a better topic to ponder.

 

[dank69]

Interesting... not a troll thread by the way. I've always pondered about these questions.

Let say there is $1. Is it better for the economy if one person keeps all of that money in a savings account or is it better if 10 people each have 10 cents to put into 10 individual savings accounts?

What if the rich person doesn't spend the $1 in the next 2 years but the 10 people spends their 10 cents share on each other's small businesses?

pearls before swine

 

[mikegg]

That's not even Robinson Crusoe economics, I don't even.

Come up with a better example. If this is your question after you profess to "always ponder" then you need a better topic to ponder.

Ok seriously. I'm NOT an economic expert - that's why I'm asking all these questions.

If you are going to troll instead of chiming in your thoughts, you might as well not waste your time in this thread.

 

[mikegg]

4. Are there graphs or data that show economic growth between republican presidents and democratic presidents?

Found answer to my own question:
http://currencythoughts.com/2008/08...med-under-democrat-and-republican-presidents/

Democrat Republican Bush43
GDP Growth 4.1% 2.9% 2.2%
Employment 2.9% 1.7% 0.5%
CPI 4.0% 5.1% 3.0%
DJIA 8.1% 6.5% 0.9%
Dollar +0.8% -3.6% -5.9

 

[EagleKeeper]

Ten in 10 separate accounts vs 10*10 in one account?

If a third party has access to all 10 accounts then it is almost a wash.
There is lost productivity in obtaining the 10*10 for an investment due to the time to collect the funds and then to repay them.

 

[EagleKeeper]

Found answer to my own question:
http://currencythoughts.com/2008/08...med-under-democrat-and-republican-presidents/

Democrat Republican Bush43
GDP Growth 4.1% 2.9% 2.2%
Employment 2.9% 1.7% 0.5%
CPI 4.0% 5.1% 3.0%
DJIA 8.1% 6.5% 0.9%
Dollar +0.8% -3.6% -5.9

One also needs to take into account external conditions (economic and political). Otherwise, you are comparing sweet and sour grapes with raisins.

 

[momeNt]

Ok seriously. I'm NOT an economic expert - that's why I'm asking all these questions.

If you are going to troll instead of chiming in your thoughts, you might as well not waste your time in this thread.

To answer your question, money is nothing but something that people agree to exchange universally for their goods.


Economy without money

Person A has item 1 but needs item 2
Person B has item 3 but needs item 1.
Person C has item 2 but needs item 3.

These 3 people can't directly exchange the good they have for the good they want because neither is willing to entertain a direct exchange of goods. Take person A, in order for him to get item 2, he would need to trade with Person B for his item 3, and then trade that with person C to get item 2.

With money, and when money first came into use, it was something everybody agreed was valuable and was willing to accept for their good, they can directly trade anybody and receive the good they need in a direct exchange. Cultures have used gold and silver, stones, and government backed paper.

So for a person to have all the money in the economy ($1), in order for him to not have any need to spend it, he would have to be completely self-sufficient or dead. In order for the other 9 people to be in a bad situation, there would have to be no other resources for them to use in order to survive, or some government has made it illegal to trade without the use of money and the enforcement is absolutely terrific.

Short answer to your hypothetical. The person with the $1 isn't part of the economy. The remaining 9 players must form some sort of barter system or use a different kind of money in order to exchange. If these exchanges are banned by the government either by having to pay sales tax with money they can't possibly attain, or for some other reasons, then the only viable alternative is to revolt and overthrow the government and continue with free trade.

 

[Juror No. 8]

Questions:

1. If the super rich don't get taxed as much, do they really reinvest their money and help drive the economy? AKA the trickle down effect?

2. Is it really better for the overall economy to tax corporations more?

3. Does more money in the pockets of the super rich help the overall economy more or money in the middle class folks?

4. Are there graphs or data that show economic growth between republican presidents and democratic presidents?

1. The super rich won't ever get taxed much, if at all, because the super rich use their money to buy up control of the media, which they then use to control the politics of the country. They also use their money to simply buy off politicians. With control of the politics of the country, they can virtually own the government. A super rich-owned government will then tax everyone except for the super rich. This is the system we have now. Government of, for, and by the super rich.

It's not a republic. It's not a democracy. It's a plutocracy.

2. No. Corporations will generally pass along the costs of a tax or regulation to their consumers.

3. More money in the pockets of the super rich is only beneficial to the super rich. Any benefits derived by people further down the chain are purely incidental.

4. Sure there are graphs and data. The question is, are you willing to buy any of the bridges they are trying to sell you?

 

[mikegg]

1. The super rich won't ever get taxed much, if at all, because the super rich use their money to buy up control of the media, which they then use to control the politics of the country. They also use their money to simply buy off politicians. With control of the politics of the country, they can virtually own the government. A super rich-owned government will then tax everyone except for the super rich. This is the system we have now. Government of, for, and by the super rich.

It's not a republic. It's not a democracy. It's a plutocracy.

2. No. Corporations will generally pass along the costs of a tax or regulation to their consumers.

3. More money in the pockets of the super rich is only beneficial to the super rich. Any benefits derived by people further down the chain are purely incidental.

4. Sure there are graphs and data. The question is, are you willing to buy any of the bridges they are trying to sell you?

To help me understand more, why do republicans always want to cut taxes for the super rich if the trickle down effect doesn't work?

 

[mikegg]

To answer your question, money is nothing but something that people agree to exchange universally for their goods.


Economy without money

Person A has item 1 but needs item 2
Person B has item 3 but needs item 1.
Person C has item 2 but needs item 3.

These 3 people can't directly exchange the good they have for the good they want because neither is willing to entertain a direct exchange of goods. Take person A, in order for him to get item 2, he would need to trade with Person B for his item 3, and then trade that with person C to get item 2.

With money, and when money first came into use, it was something everybody agreed was valuable and was willing to accept for their good, they can directly trade anybody and receive the good they need in a direct exchange. Cultures have used gold and silver, stones, and government backed paper.

So for a person to have all the money in the economy ($1), in order for him to not have any need to spend it, he would have to be completely self-sufficient or dead. In order for the other 9 people to be in a bad situation, there would have to be no other resources for them to use in order to survive, or some government has made it illegal to trade without the use of money and the enforcement is absolutely terrific.

Short answer to your hypothetical. The person with the $1 isn't part of the economy. The remaining 9 players must form some sort of barter system or use a different kind of money in order to exchange. If these exchanges are banned by the government either by having to pay sales tax with money they can't possibly attain, or for some other reasons, then the only viable alternative is to revolt and overthrow the government and continue with free trade.

Thanks for the long answer but I think we mis-communicated.

My question revised:
If there is $2 total in the U.S. Is it better for the U.S. economy to have 1 person controlling $1 and 10 people sharing the other $1 or distributing the $2 to 20 people?

 

[Acanthus]

Thanks for the long answer but I think we mis-communicated.

My question revised:
If there is $2 total in the U.S. Is it better for the U.S. economy to have 1 person controlling $1 and 10 people sharing the other $1 or distributing the $2 to 20 people?

The concept you are referring to is economic inequality. This figure in economics is called the Gini Index. There is a ton of data on this for every nation from about the 1950's forward (and further back for nations that were keeping good records).

If you compare the Gini Index to economic growth, a lower number (more equality) gives you a stronger economy with greater growth and lower inflation.

Edit: I accidentally a word.

Link to most current Gini Indexes (higher is less equal, lower is more equal), the US is expected to sharply rise this year.

http://www.nationmaster.com/graph/eco_gin_ind-economy-gini-index

The last time i measured the gini index for the United States was for a macroeconomics and policy project, 2010. 47.8.

 

[Juror No. 8]

To help me understand more, why do republicans always want to cut taxes for the super rich if the trickle down effect doesn't work?

Because it's all nonsense. It's all part of a false narrative to convince the American people that there are major differences between the two parties.

Both parties work for the super wealthy and carry out the policies desired by the super wealthy. Why is this the case? Because the politicians of both parties are totally dependent on money and media to get into office. And who has control of the money and media? The super rich, that's who. Think of the parties as interchangeable management teams. The Republicans are marketed as the party of "small government", while the Democrats are marketed as the party of "big government". But no matter who is elected to office, the policies won't change. Either way, we'll get big, corporate government (fascism), which is to say, government of the super rich.

That's why nothing ever changes. That's why Republicans never overturn anything the Democrats do once they reach office, and why the Democrats never overturn anything the Republicans do when they reach office. Do you remember Obama's campaign in 2008? He campaigned as if he was going to be the anti-Bush. His speeches were all about changing things in Washington. He was going to be the opposite of Bush.

Did any of that end up happening? Of course not. Obama's presidency has essentially been a third Bush term. Nothing changed. Debt. War. Occupations. Police state. Perpetual deficits. Government growth. Failing education. Corruption. It's all the same, but a little bit worse. And it's going to continue on and on and on because that's part of the agenda of the super rich.

Alex Jones of all people did a good job explaining how this system works in a concise, easy-to-follow video:

https://www.youtube.com/watch?v=wpLaD1C7egI&feature=related

 

[mikegg]

The concept you are referring to is economic inequality. This figure in economics is called the Gini Index. There is a ton of data on this for every nation from about the 1950's forward (and further back for nations that were keeping good records).

If you compare the Gini Index to economic growth, a lower number (more equality) gives you a stronger economy with greater growth and lower inflation.

Edit: I accidentally a word.

Link to most current Gini Indexes (higher is less equal, lower is more equal), the US is expected to sharply rise this year.

http://www.nationmaster.com/graph/eco_gin_ind-economy-gini-index

The last time i measured the gini index for the United States was for a macroeconomics and policy project, 2010. 47.8.

So is there no merit to politicians wanting to cut taxes for the super-rich?

Question: if this is true and republican & democrat citizens all complain about the lack of economic equality, then why would anyone vote for republicans?

 

[drebo]

To help me understand more, why do republicans always want to cut taxes for the super rich if the trickle down effect doesn't work?

More money in the economy (i.e. not in the hands of the government) is never a bad thing. Ever.

Again, the super rich don't keep their money in a mattress. By putting that money in a savings account, etc, that money is being used as loans for people buying houses, security private credit, for business lines of credit, etc. Without that money in there, we would have no economy. You think that banks can just afford to give money out without some backing?

To answer the question as to whether 1x10 or 10x1 is better, it really ends up being irrelevant. In a small scale, 1x10 would be superior, as there'd be less overhead. But if the facilities already exist for large-scale shared investment, then it makes no difference.

Again, this isn't about spending money. It's about making capital available down the food chain. Sure, 10 people spending a dollar is more likely than one person spending 10 dollars, but that's not the question. The question is where do those 10 people get that dollar to spend. If they're small businesses, they don't have ability to approach the one guy with $10 directly. They obtain their loans from a centralized institution (a bank,) which lends out the one guy's $10 for him, in exchange for a portion of the interest collected on the loan.

That way, the small business gets its money easily and can now spend its $1 on whatever it needs to.

 

[drebo]

So is there no merit to politicians wanting to cut taxes for the super-rich?

Question: if this is true and republican & democrat citizens all complain about the lack of economic equality, then why would anyone vote for republicans?

Not sure how you take that stance based on the information available, except that it was already your predetermined opinion before you even made the thread.

 

[mikegg]

More money in the economy (i.e. not in the hands of the government) is never a bad thing. Ever.

Again, the super rich don't keep their money in a mattress. By putting that money in a savings account, etc, that money is being used as loans for people buying houses, security private credit, for business lines of credit, etc. Without that money in there, we would have no economy. You think that banks can just afford to give money out without some backing?

To answer the question as to whether 1x10 or 10x1 is better, it really ends up being irrelevant. In a small scale, 1x10 would be superior, as there'd be less overhead. But if the facilities already exist for large-scale shared investment, then it makes no difference.

Again, this isn't about spending money. It's about making capital available down the food chain. Sure, 10 people spending a dollar is more likely than one person spending 10 dollars, but that's not the question. The question is where do those 10 people get that dollar to spend. If they're small businesses, they don't have ability to approach the one guy with $10 directly. They obtain their loans from a centralized institution (a bank,) which lends out the one guy's $10 for him, in exchange for a portion of the interest collected on the loan.

That way, the small business gets its money easily and can now spend its $1 on whatever it needs to.

I kinda get what you're saying but I'm still confused.:|

Ok so the super rich deposits money into the bank which regular people borrow to do business. Ok I got that. But if you give the dollar to 10 people, they should all have the money in the bank too, no? Regular people also deposit money into the bank which can be borrowed by other regular people, yes? Why does money need to be in the hands of the super rich for banks to have money to lend out?

If the entire country has $2, then it will always have $2. Does it matter if the money is in the hands of super rich or normal people? The money isn't going to magically be turned into $4 if the super rich has it.

Of course I'm not factoring in money being used to purchase goods from another country.

The only case I see for the super rich to have more money is if they can use their enormous resources to pull in more money from foreign countries that small businesses cannot.

 

[mikegg]

Not sure how you take that stance based on the information available, except that it was already your predetermined opinion before you even made the thread.

I'm not voting in this upcoming election.

My predetermined opinion was that giving more money to the super rich isn't better for the economy but I'm open to any opinion because I'm not an expert in this matter. Hence, why I ask many questions.

 

[drebo]

I kinda get what you're saying but I'm still confused.:|

Ok so the super rich deposits money into the bank which regular people borrow to do business. Ok I got that. But if you give the dollar to 10 people, they should all have the money in the bank too, no? Regular people also deposit money into the bank which can be borrowed by other regular people, yes? Why does money need to be in the hands of the super rich for banks to have money to lend out?

If the entire country has $2, then it will always have $2. Does it matter if the money is in the hands of super rich or normal people? The money isn't going to magically be turned into $4 if the super rich has it.

Of course I'm not factoring in money being used to purchase goods from another country.

Maybe, maybe not. You have to look at it marginally. For those 10 people, how much of that $1 will be left over for investment after living costs are accounted for? If it costs $0.50 per person, now you've only got $5 available in the bank, versus $9.50. But I can make up numbers all day in whatever scale you want.

Either way, the end game is that an engineered economy doesn't work. You cannot legislate equality of outcome, nor can you legislate equality of wealth.

The common mistake made when people bitch about how "trickle down" doesn't work is that they expect it to be proportional based on consumption or income. It's not, and it can't be. By definition, those that make less will spend a greater proportion of their income. You can't "fix" that.

What drives spending is capital, not income. See the Walmart thread where people talk about ex Military people coming out of the service with $50k in the bank and blowing it all on stupid shit. He may only have been making $25k/yr, but when he comes out with $50k in the bank, he's ready to spend it. Without capital, there is no spending. Thus, without rich people to provide the banks with the capital to loan to small businesses and people, there would be no spending.

That investment in banks (or stocks or whatever) comes from the marginal capital left over after that rich person has attended to all his needs and wants, which, percentage-wise, will be far greater than 10 people with combined wealth equaling the one rich person.

 

[Acanthus]

So is there no merit to politicians wanting to cut taxes for the super-rich?

Question: if this is true and republican & democrat citizens all complain about the lack of economic equality, then why would anyone vote for republicans?

cutting taxes does help, assuming you are also cutting wasteful government spending that does not contribute to the economy. The problem with that line of thinking is that it's hard to label any spending as ineffective.

In economics you have to continuously consider what is being given up when you make economic decisions. This is called opportunity cost. You can cut taxes by, lets say, 5 trillion dollars over the next ten years. This would be a large boon to the economy IF you were just adding this money into the economy. However, you are giving up funding in education, social services, defense, public health, regulatory bodies, etc which all contribute to the economy through jobs, direct spending, and residual benefits like reducing fraud (FTC, CFTC, IRS, etc)

There is a point in which raising taxes becomes prohibitive to growth. We are no where near that point.

 

[piasabird]

The ultra-rich that only invest only pay 15% fed income tax. You can raise the income tax all day long and it will not hurt them because they have no income. They only have capital gains. As a country we could change how we tax capital gains but it might backfie and scare away people who want to invest in the USA.

The other problem is if you raise taxes on small businesses what might happen is all the costs will be passed onto the consumer who purchase goods and services from small businesses. Either that or they might be forced out of business by the wal-marts of the world.

Maybe we need some ways to tax the large corporations and do away with all their deductions and credits. The big problem on income tax is really not the tax rate itself it is all the deductions and credits and loopholes. We could set a ceiling like at $500k that if you go past that you do not get to receive all the deductions and credits, or slowly say over 5 or 10 years fase them out.

Or we could just let the bush tax cuts expire and hurt everyone equally.

 

[Acanthus]

The ultra-rich that only invest only pay 15% fed income tax. You can raise the income tax all day long and it will not hurt them because they have no income. They only have capital gains. As a country we could change how we tax capital gains but it might backfie and scare away people who want to invest in the USA.

The other problem is if you raise taxes on small businesses what might happen is all the costs will be passed onto the consumer who purchase goods and services from small businesses. Either that or they might be forced out of business by the wal-marts of the world.

Maybe we need some ways to tax the large corporations and do away with all their deductions and credits. The big problem on income tax is really not the tax rate itself it is all the deductions and credits and loopholes. We could set a ceiling like at $500k that if you go past that you do not get to receive all the deductions and credits, or slowly say over 5 or 10 years fase them out.

Or we could just let the bush tax cuts expire and hurt everyone equally.

Corporations are people. Tax them as individuals. Cut capital gains tax entirely. Tax it all as regular income.

 

[drebo]

Corporations are people. Tax them as individuals. Cut capital gains tax entirely. Tax it all as regular income.

The problem with that is that they've (or somebody else) has already paid income tax on that money.

If you want to tax dividends as income, be my guest. But to tax investment gains as straight income is counter-intuitive.