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  1. #1
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    How To Stimulate The Economy In 1 Step

    Tax Accumulated Wealth.

    Why should we encourage people to save money? Tax the money that they DONíT spend.

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    Fuck Tax

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    How to stimulate the economy in 1 step: Legalize weed

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  5. #4
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    Quote Originally Posted by ConnorCG View Post
    Tax Accumulated Wealth.

    Why should we encourage people to save money? Tax the money that they DONíT spend.
    This ^

    It would introduce the multiplier effect upon the marginal propensity to save.

    Sorry but I do economics.

  6. #5
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    Both of you are retards. That's a stupid ass idea.

    People wouldn't be able to save, inflation + taxes > interest. No reason to save... Banks wouldn't be able to loan out to businesses. Inflation would skyrocket, and exactly how would that fix it? Oh, that's right... It'd make it worse.



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    Quote Originally Posted by arunforce View Post
    Both of you are retards. That's a stupid ass idea.

    People wouldn't be able to save, inflation + taxes > interest. No reason to save... Banks wouldn't be able to loan out to businesses. Inflation would skyrocket, and exactly how would that fix it? Oh, that's right... It'd make it worse.
    I do believe we are talking about stimulation. Inflation is a direct symptom of economic stimulation. Interest is an indicator of growth. Increased Government revenue = increased Gov expenditure. Because it will reduce MPS and increase M PC this will increase the multiplier causing further stimulus. Now explain again why we are retards?

    Edit: In Australia there is already a standardized tax on Bank deposits to do exactly what Connor is saying.
    Last edited by Doc; 10-03-2010 at 11:34 PM.

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    You know you have a good idea when somebody is arguing on your behalf using terms that you don't understand.

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    Quote Originally Posted by arunforce View Post
    Both of you are retards. That's a stupid ass idea.

    People wouldn't be able to save, inflation + taxes > interest. No reason to save... Banks wouldn't be able to loan out to businesses. Inflation would skyrocket, and exactly how would that fix it? Oh, that's right... It'd make it worse.
    I seen what you did there.

  11. #9
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    Quote Originally Posted by Doc View Post


    I do believe we are talking about stimulation. Inflation is a direct symptom of economic stimulation. Interest is an indicator of growth. Increased Government revenue = increased Gov expenditure. Because it will reduce MPS and increase M PC this will increase the multiplier causing further stimulus. Now explain again why we are retards?

    Edit: In Australia there is already a standardized tax on Bank deposits to do exactly what Connor is saying.
    You do realize inflation is a bad thing..? Only goods benefit from it, so most people would be hurt, further increasing the gap between poor and rich. Inflation is caused by too much money chasing too few goods. By taxing banks, people will spend more money on goods, thus increasing the inflation rate and further decreasing the value of money. Banks will not be able to correctly loan money to businesses, except by raising the interest rate past inflation and taxes, thus making it harder and riskier for businesses to get loans. Growth would be stagnant, companies would be unable to secure funds to maintain or expand. Jobs would be lost, companies and banks would go under, people's money would be lost, even the FDIC couldn't hold down the amount of money that would be lost, thus offsetting any "potential gain" from taxing savings. Having a MP-C of 1 is a bad thing. You don't want to increase the MP-C past the natural rate.

    Taxing deposits != taxing savings. Taxing income then taxing it being saved is overbearing. Why the fuck should the government tax me twice before I even use my money?

    Yeah, you both are retarded.



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  12. #10
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    Quote Originally Posted by arunforce View Post


    You do realize inflation is a bad thing..? Only goods benefit from it, so most people would be hurt, further increasing the gap between poor and rich. Inflation is caused by too much money chasing too few goods. By taxing banks, people will spend more money on goods, thus increasing the inflation rate and further decreasing the value of money. Banks will not be able to correctly loan money to businesses, except by raising the interest rate past inflation and taxes, thus making it harder and riskier for businesses to get loans. Growth would be stagnant, companies would be unable to secure funds to maintain or expand. Jobs would be lost, companies and banks would go under, people's money would be lost, even the FDIC couldn't hold down the amount of money that would be lost, thus offsetting any "potential gain" from taxing savings. Having a MP-C of 1 is a bad thing. You don't want to increase the MP-C past the natural rate.

    Taxing deposits != taxing savings. Taxing income then taxing it being saved is overbearing. Why the fuck should the government tax me twice before I even use my money?

    Yeah, you both are retarded.
    You raise good points however everything you said is a long term effect of a unnaturally high tax upon liquid savings. Not sure about what Connor is referring to, but having a minimal tax upon deposits will increase expenditure for STIMULUS. Stimulus is the process of increasing the amount of transactions in the SHORT term. The effect it would have upon settlement exchange accounts would be minimal thus not hindering the amount in which they can safely loan and reducing the amount of adjustments required in interest rates to meet the official cash rate. Even a 1% tax would have a stimulating effect through the economy through simple multiplier, and the speed rate would barely hinder it as it is direct government revenue. When talking about changes in MP-C being so low (which is what I'm talking about) the changes in demand pull inflation would be very minimal, looking at around quarter of a percentage point maximum.

    Of course I'm basing all of this off the Australian economy, I'm not sure how the banks in America operate so what you are saying may well be true for your domestic economy.

  13. #11
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    Quote Originally Posted by Doc View Post


    You raise good points however everything you said is a long term effect of a unnaturally high tax upon liquid savings. Not sure about what Connor is referring to, but having a minimal tax upon deposits will increase expenditure for STIMULUS. Stimulus is the process of increasing the amount of transactions in the SHORT term. The effect it would have upon settlement exchange accounts would be minimal thus not hindering the amount in which they can safely loan and reducing the amount of adjustments required in interest rates to meet the official cash rate. Even a 1% tax would have a stimulating effect through the economy through simple multiplier, and the speed rate would barely hinder it as it is direct government revenue. When talking about changes in MP-C being so low (which is what I'm talking about) the changes in demand pull inflation would be very minimal, looking at around quarter of a percentage point maximum.

    Of course I'm basing all of this off the Australian economy, I'm not sure how the banks in America operate so what you are saying may well be true for your domestic economy.
    Either way, it hurts savings, which is the end result of having this recession in the first place. After the collapse of Lehman Brothers, Fannie, Freddie, WAMU, and AIG and other major banks nearing collapse, it became increasingly harder for businesses, families, and farmers to get loans. The US Government was looking for a solution to help fund businesses without stepping over their powers, and the best way was to prevent the collapse of major banks. The money multiplier would be even more ineffective in your case, because it works in conjunction with saving.

    A consumer stimulus, in this case wouldn't help anything. Look at Bush's stimulus, I think it was like over a trillion dollars to give money to everyone who worked. It barely did anything, and put us way deeper in debt. We didn't enter in a recession because of consumer spending, consumer spending went down as a result of bank failures and the sub-prime mortgage crisis.

    We needed a business stimulus, hence the major % of money going to banks, and infrastructure upgrade. For the most part, I'd say it worked. If we trade long term consumer well being for short term business well being, we'd be digging ourself into a bigger hole. That's why the Federal Reserve lowers interest rates and injects money into the economy, it hurts consumers short term.



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  14. #12
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    Quote Originally Posted by arunforce View Post


    Either way, it hurts savings, which is the end result of having this recession in the first place. After the collapse of Lehman Brothers, Fannie, Freddie, WAMU, and AIG and other major banks nearing collapse, it became increasingly harder for businesses, families, and farmers to get loans. The US Government was looking for a solution to help fund businesses without stepping over their powers, and the best way was to prevent the collapse of major banks. The money multiplier would be even more ineffective in your case, because it works in conjunction with saving.

    A consumer stimulus, in this case wouldn't help anything. Look at Bush's stimulus, I think it was like over a trillion dollars to give money to everyone who worked. It barely did anything, and put us way deeper in debt. We didn't enter in a recession because of consumer spending, consumer spending went down as a result of bank failures and the sub-prime mortgage crisis.

    We needed a business stimulus, hence the major % of money going to banks, and infrastructure upgrade. For the most part, I'd say it worked. If we trade long term consumer well being for short term business well being, we'd be digging ourself into a bigger hole. That's why the Federal Reserve lowers interest rates and injects money into the economy, it hurts consumers short term.
    Ahh I see where your coming from. This is also where our countries differ. Where in America the recession was primarily a business induced cycle, whereas in Australia it was caused by falling consumer expectations in which our government needed to stimulate spending. Because the majority of our trade derives from our mining industries which happen to remain stable during recession (thanks to China) our Government was able to focus its expenditure on stimulating consumers and imposing small protectionist policies for industries which would be hard hit by a recession. The Reserve Bank managed to reduce the official cash rate to half of what it was prior to the GFC, thus allowing the banks to reduce interest and the amount they held in the settlement exchange accounts. This allowed the government to impose a small taxation on bank deposits as our banks had already been meeting the cash rate. Since then the tax has been cut for the first $1000 of deposit.

    But yes ours was mainly a massive ($300 billion) consumer stimulus aided by our booming mining industry.

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    I was just throwing around an idea.

    You guys had to get technical on me :/

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    Quote Originally Posted by ConnorCG View Post
    I was just throwing around an idea.

    You guys had to get technical on me :/
    I bet you didn't see it coming.

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    Quote Originally Posted by Doc View Post


    I do believe we are talking about stimulation. Inflation is a direct symptom of economic stimulation. Interest is an indicator of growth. Increased Government revenue = increased Gov expenditure. Because it will reduce MPS and increase M PC this will increase the multiplier causing further stimulus. Now explain again why we are retards?

    Edit: In Australia there is already a standardized tax on Bank deposits to do exactly what Connor is saying.
    /doesnt understand US economy

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