On Wed, Mar 10, 2004 at 12:21:37PM -0500, James Manning wrote: > > So I say: Pull that money back from those fat cats and put it back into > > play! > > fat cats don't have their money in play? Here I thought they were > investing it. Heck, even if they just keep it in a checking account > it gets invested, just by the bank instead of them directly. > > Maybe I'm missing something - is $100 spent on food at a grocery store > more valid than $100 that got invested in the grocery store itself? > > Is investment not a valid form of cash flow? Maybe it's been too long > since my econ 101.
You've got your finger on the crux of the problem of tax rebates and their effect on the economy. Money spent at Wal-mart gets circulated at a higher velocity than money spent on assests. $100 invested in equities at a discount broker yields $10 in commissions to the GDP, while $100 spent at Wal-Mart represents a $100 increase in the GDP. If the $100 is spent on a new business venture, then odds are on the entrepreneur having used outsourcing instead of creating jobs. As you can see, much of the tax cut winds up outside the US regardless of how it is spent. The furor over taxes is just political hay. The real problem is that the first world economy worker has figured out that second and third world economy workers are winning jobs in competition. Personally, I think we'll just have to work harder for less money. On ABC News last night there was a segment about a startup in Beantown that ran an ad for s/w engineers for $40k/yr. They got 100+ high quality resumes. The company is profitable. They created 6-10 jobs. -- Mike When the correction first comes, we tend to underreact. While we do not like the surprise, we tend to think of it as maybe a one-time thing. Things, we believe, will soon get back to normal. We do not scale back our expectations sufficiently. It apparently takes years for this to work itself out. - John Mauldin -- TriLUG mailing list : http://www.trilug.org/mailman/listinfo/trilug TriLUG Organizational FAQ : http://trilug.org/faq/ TriLUG Member Services FAQ : http://members.trilug.org/services_faq/ TriLUG PGP Keyring : http://trilug.org/~chrish/trilug.asc
