Dear Friends,
It seems to me that if the government really wanted to stimulate the economy, (not just seize control and establish a command and control economy), they would declare a total tax holiday… for a month.
Wow, can you imagine the stimulus to the economy? It would be huge! Think about getting every dollar you earn in your paycheck for a month. No income tax no FICA tax, no sales tax, no duty fees. No matter what you do with the money it will help the economy. Not temporarily like government make work. (Perhaps we can pay someone to count the tips on oak leaves this time).
Money that is used to pay off debt will reduce the debt load of the American citizen. That would free up money for the banks to lend if they choose. The incentive will be to lend it however not horde it. Due to the other effects of a month long total tax holiday.
Money that is saved will give the banks more liquidity. That will further increase the availability of money to lend. (Perhaps causing a glut of money to lend).
Money that is used to buy goods and services will stimulate production. That will in turn stimulate the need for workers. With capital now available business would think about expanding. Especially if they are flush with extra money they didn’t have to pay the government. They will be inclined to invest rather then pay dividends. Investment would generate more demand for goods and services. Dividends would give people more money to pay off debt, invest, or spend.
Last time the government came out with a “New Deal” a recession turned into a decade long recession. Today we are being sold a “New Way.” But from my perspective it looks a lot like the “New Deal.”
I wonder… if some “economists” think the New Deal was so effective, then why did, it take the Second World War, and 500,000 American boys deaths, as well as tens of millions of boys in other counties deaths, to get us out of it?
