For another insight, read this:

http://jewishworldreview.com/0209/west021309.php3

It will scare the socks off you.

But a questions sir, Is DC the Imperial City, or NYC?

You guys can study economics until the cows come home, until there is confidence in the market, what difference does it make? There is an emotion factor that needs to be handled. Question is (and Ive read a lot of criticism with little realistic construction) how do you instill confidence?

Confidence in growth so someday I can retire comfortably.
Confidence that I wont loose my job, consequently my home.
Confidence that I can afford to send my kids to college.
Confidence that I can afford to pay doctor bills should something bad happen.

I agree the sky is not falling, as badly as Obama has it described, but its impossible to see a glass half full when no one is hiring, and to me that is the problem. Not the tax rates of history.

Where is the warm an fuzzy that any of this? … or maybe what action, or philosophy would create the best, most effective “warm and fuzzy” to keep the US of A from falling off the tracks?

FWIW? That would be zero. NEVER use Wikipedia as a reliable source. I can go in and change those numbers anytime I want to read anything I want.

Supply side economics haven’t been given a chance. The Keynesian theories embedded in our government (that government is the be all and end all of the economy) have consistently prevented it. I could easily ask the same question: Keynesian theories have been tried for 70 years. Why haven’t THEY worked?

The scary thing is that we are walking down the exact same path as we did in 1929. BUY AMERICAN – then Obama got his hand slapped by Europe (reference Smoot Hawley Act). Crash of the stock market followed by the Fed lowering interest rates (150 basis points in 1929! TARP and the Reconstruction Finance Corporation (both of which refuse to disclose their loan activities). Infrastructure Jobs, Government Jobs! (Public works was widely accepted by economists to reduce unemployment in 1930). Expectation of a recovery in 2010 – many politicians and economists expected a full recovery in 1931, too. Federal spending increasing 42 percent — guess whether that was 2009 or 1931? Tax increases in 1932 under Hoover (which resulted in lower revenues to the Treasury of 12 percent) and the fact that we will probably see a tax increase — as promised by Obama — in 2010 or 2011… the list goes on and on.

Remember that after all the stimulating that FDR and the Congress in the 30′s did … it didn’t work. We had three recessions DURING the Great Depression. Roosevelt’s programs were first passed in 1933 but economists generally agree that the Great Depression did not end until 1939, when the country began preparing for World War II. Unemployment rates, which reached as high as 25%, took several years to recover and did not get below 9% until 1940. In reality, Hitler and Hirohito did more to end the Great Depression than John Maynard Keynes, FDR, and the New Deal.

And the marginal rates link was interesting, but again. NO ONE paid those rates. NOT ONE SINGLE PERSON. Do you really believe that someone making $400,000 in 1960 actually paid $360,000 in Federal taxes? Really, c’mon. Under the Reagan administration, the Congress lowered rates but also eliminated deductions and cash flows to the Treasury actually improved. Remember, it’s Congress that taxes and spends and that sets tax rates. The President is basically just a figurehead and spokesperson who signs bills and raises more money for his party.

I still am baffled why you think tax rates won’t increase. It’s like saying you make $40,000 annually and plan to double your debt from $100,000 to $200,000 and don’t plan to increase your income in any way. Oh yeah, Keynesians believe that the government isn’t subject to common sense …

What do you think would happen if my business’s tax rates were lowered? Since I don’t operate in a vacuum, they would also be lowered for my competitors. Then what? My competitors would more than likely lower their prices and the market would correct itself. BTW, this actually happens on a daily basis in my industry.

Does debt = money? Yes, in accounting terms. Accounts receivable is an asset, but if you’ve ever needed real cash to make payroll and had a $345,000 account go bankrupt on you, you quickly learn that debt = money only on the books. When it comes time for a check to clear, it’s a different story altogether.

In the preface to the German edition [of his General Theory], Keynes boasted that his theory was particularly well suited for totalitarian regimes and lamented that it was less fit for the conditions prevailing in freer societies. His words, not mine.

On p. xxvi of his Collected Writings Keynes writes:

“Nevertheless the theory of output as a whole, which is what the following book purports to provide, is much more easily adapted to the conditions of a totalitarian state, than is the theory of production and distribution of a given output produced under conditions of free competition and a large measure of laissez-faire.”

There was a time, many years ago, that many people thought smoking was good for you. Today we know that this was just an excuse because it provided cover for what people wanted to do anyway: smoke. Today, people smoke even though they know for sure that it is not good for them. At least the illusions are gone.

Keynesianism is both similar and different. Sixty years ago, governments attempted macroeconomic stimulation through spending, debt accumulation, and eventual inflation and taxation. They thought it was good for us. It turns out that it wasn’t good. Nothing has failed so often and in some many places and under as many unique situations as Keynesianism.

Why did governments continue to do it, and why do they do it today? Because they want to, and for the same reason that people smoke. The subjective pleasure it provides the institution exceeds the serious health risks. The irony is that they still claim, despite all evidence, that it is good for us too.

Listening to Obama (and Bush before) tout these “stimulus packages” is not that different from hearing cigarette ads from the 1930s-50s.

To understand more deeply, the analogy with smoking breaks down. Governments do like Keynesianism because it is good for them, but the rest of us pay the price. Keynesianism brings in massive new revenue to spend on projects important to the government and the politicians in power.

Visit Washington DC and you will see something amazing. It’s a boom town, and as never before. Construction hasn’t slowed, the stores are packed with inventory, there are no liquidations, the office market is holding up, vacancies are down not up, and even the high-end stores are packed with people spending like it’s 2007.

That is not surprising after several rounds of stimulus in which trillions have been sucked out of the private economy of the rest of the country. The Imperial City is booming even as the rest of the country is suffering. Keynesian is certainly good for them, but it is not for us.

Hence it is not completely crazy that a discredited economic doctrine — failures piled upon failures (the Netherlands, anyone?) — could have such a sway over economic policy. Listening to the blather from the beltway, you would think that John Maynard Keynes had all the answers. It’s very foolish to believe it.

It seems like a universal principle: those who are out of power favor free markets more than those in power. So the agenda seems clear: keep everyone out of power.

Good luck with that.

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