Classic Obama double-speak

[petegz28]

Obama said the top priority in solving the country's fiscal crisis "must be jobs and growth."

White House press secretary Jay Carney said the president would bring to the table a proposal for $1.6 trillion in new taxes on business and the wealthy when he begins discussions with congressional Republicans, a figure that Obama outlined in his most recent budget plan. The targeted revenue is twice the amount Obama discussed with Republican leaders during debt talks during the summer of 2011.

http://www.cnbc.com/id/49821777

Ok, you can't say on one hand your #1 priority is "jobs and growth" and on the other hand talk about raising taxes on business.

For the economically challenged, raising taxes on businesses raises the cost of doing business which does not spur job creation nor growth of the economy.

I swear listening to this Admin and his party makes me feel like I took a handfull of crazy pills sometimes.

[petegz28]

[J Diddy]

I agree that the rates need to rise. I also saw the need to keep them down--to keep people buying and stimulate the economy.

[petegz28]

Originally Posted by Literature

Because we want people to make big purchases.

When people are in fear of or are losing their jobs you are not going to get sustained purchases of big ticket items.

You want peope to make big purchases? Make their food and gas cheaper.

An extra $20 a week that doesn't go to the gas tank goes towards disposable income.

Higher rates mean higher returns on things like savings accounts that seniors depend on. The more they earn on interest the more they spend. The less they earn the more they save.

[petegz28]

Originally Posted by J Diddy

I agree that the rates need to rise. I also saw the need to keep them down--to keep people buying and stimulate the economy.

How's that worked out? What has the consequence been of keeping rates low? Higher gas and food bills. The cost of living has gone up while incomes are not.

In other words, get rid of the hidden tax burden.

[BucEyedPea]

Interest rates encourage savings, which eventually lead to capital formation for investment and new businesses.
Without it there is no additional capital for the economy and that includes capital for labor.

[BucEyedPea]

Originally Posted by petegz28

How's that worked out? What has the consequence been of keeping rates low? Higher gas and food bills. The cost of living has gone up while incomes are not.

In other words, get rid of the hidden tax burden.

That's right, the expansion of the money supply acts like a hidden tax because the dollar buys less and less.

[petegz28]

Originally Posted by BucEyedPea

Why?

Because our spend happy Gov can borrow at the cheapest rates it has ever had in God knows how long!

Wall St. has been benefiting hand over fist because of these low rates.

Main St. on the other hand? Higher gas prices at the pump. Higher grocery bills at the store. Higher utility bills in the mail. Higher costs on basic materials to make things.


Not a very fair tradeoff.

[BucEyedPea]

Originally Posted by J Diddy

I agree that the rates need to rise. I also saw the need to keep them down--to keep people buying and stimulate the economy.

No production is more important than consumption. You can't have the latter without the former. You can't just stimulate consumption with monetary gimmicks...we have to produce and then exchange what we produce.

[chiefforlife]

Given that this thread started out about job creation...wouldnt charging business's more money to borrow, stifle job growth in the same way as raising taxes?
The difference being, the government would get the gain as opposed to the banks.

[BucEyedPea]

Originally Posted by petegz28

Because our spend happy Gov can borrow at the cheapest rates it has ever had in God knows how long!

Wall St. has been benefiting hand over fist because of these low rates.

Main St. on the other hand? Higher gas prices at the pump. Higher grocery bills at the store. Higher utility bills in the mail. Higher costs on basic materials to make things.


Not a very fair tradeoff.

Yeah, I never thought of the govt being able to get the cheapest rates ever. I knew it encouraged excessive spending. I did know that Wall St benefits more than Main Street. The Keynesian model actually does make the rich richer and the people poorer. Especially the elderly who are on fixed incomes. This protects the assets of the wealthy as it keeps their values from falling and they can afford to borrow more, then pay back with cheaper dollars. Not the little guy. This is why the poor and middle-class are getting poorer while the upper percent gets richer.

I think this is why the left keeps crying "trickle-down" doesn't work. They just haven't identified the real cause is all.

[petegz28]

Originally Posted by chiefforlife

Given that this thread started out about job creation...wouldnt charging business's more money to borrow, stifle job growth in the same way as raising taxes?
The difference being, the government would get the gain as opposed to the banks.

NO! Why? Because you are offsetting that cost by putting more disposable income into the economy.

In other words, if I am spending $200 a month less on gas and food I am spending that $200 in your store. That increases your customer base thus allowing to compensate for higher interest rates

The government gets more $ through increased sales tax and incomes from the increased spending in businesses


See, that's called growing the tax base. As a business owner it would be easier to handle higher rates if I have more people walking through my door because they have more money to spend in my shop instead of the gas station.

On the other hand if customers are still spending out the ass at the gas station they don't have extra $ to spend in my shop and higher taxes are going to hurt even worse.

[La literatura]

Originally Posted by petegz28

Because our spend happy Gov can borrow at the cheapest rates it has ever had in God knows how long!

Wall St. has been benefiting hand over fist because of these low rates.

Main St. on the other hand? Higher gas prices at the pump. Higher grocery bills at the store. Higher utility bills in the mail. Higher costs on basic materials to make things.


Not a very fair tradeoff.

If a small business takes out a line of credit at their bank, what is their payment rate based on?

Low rates will have to go up again, but it's not because that will make groceries cheaper.

[BucEyedPea]

Originally Posted by chiefforlife

Given that this thread started out about job creation...wouldnt charging business's more money to borrow, stifle job growth in the same way as raising taxes?
The difference being, the government would get the gain as opposed to the banks.

It would also allow for capital formation which would eventually create jobs. That would be because it's encourages savings then just consuming all the time. There has to be some balance.

It wouldn't happen overnight but the someone needs to slam on the brakes the way Volcker did under Reagan.

[petegz28]

Originally Posted by BucEyedPea

Yeah, I never thought of the govt being able to get the cheapest rates ever. I knew it encouraged excessive spending. I did know that Wall St benefits more than Main Street. The Keynesian model actually does make the rich richer and the people poorer. Especially the elderly who are on fixed incomes. This protects the assets of the wealthy as it keeps their values from falling and they can afford to borrow more, then pay back with cheaper dollars. Not the little guy. This is why the poor and middle-class are getting poorer while the upper percent gets richer.

I think this is why the left keeps crying "trickle-down" doesn't work. They just haven't identified the real cause is all.

Plus the fact that the Fed has been buying all these bonds and what not, the treasury doesn't want to be paying higher rates to the Fed while the Fed is buying chunks of treasury bonds.

It's a giant ponzi scheme. This is why the $ is never talked about. It's boring and most people don't understand currencies. And politicians like it that way because they can blame the big bad oil companies when gas gets high instead of correctly identifying the real cause.

[J Diddy]

Originally Posted by petegz28

How's that worked out? What has the consequence been of keeping rates low? Higher gas and food bills. The cost of living has gone up while incomes are not.

In other words, get rid of the hidden tax burden.

There's a couple of problems I see with your hypothesis. First you are assuming that the increased gas prices are associated with lower interest. While this may be the case, it may also be the case that increased demand in developing countries and in China may have pushed the cost up. (which is what is widely being reported) The second is the effect on low interest rates on large purchases such as homes. These are both untestable and cannot be assumed. It must also be proven that higher interest rates must achieve the desired results.