The Economy
Badtux, the economics penguin, thinks a nest egg of gold is a bad idea. He points out that gold is only worth what some else is willing to give you in exchange for it.
The same can be said for stocks. If no one is interested in buying the stocks you own, they are worth nothing.
In an article on the drop in the stock market someone said, well, yeah, it tanked, but since 1985 it had gone up 8.4 %. True, but most of that increase occurred during the Clinton years, because since the summer of 2001 until this year, you would have made more money in a savings account paying 4% APR compounded monthly, and you wouldn’t have lost $500 bucks this week.
Historically the markets do better under Democratic Presidents, so why does Wall Street support Republicans? To understand you have to understand how brokers make their money. Brokers make their money by charging fees when stock are bought and sold. If the market is stable and things are running smoothly, there is no reason to buy and sell stocks and brokers don’t make a lot of money. When there is turmoil and a lot of transactions, brokers make a lot of money. Repubs not only reduce their taxes, they tend to cause a lot of market swings which are good for brokers.
There is nothing a broker dislikes more that a real investor. A real investor buys stocks in companies that are stable and have reasonable growth potential for the long term. After buying the stock, a real investor simply holds it and collects dividend checks. Brokers can’t even cover their tips for lunch on the fees that real investors pay. Brokers want gamblers, people chasing the next big thing, people who do a lot of buying and selling.
Looking at the anemic performance of the stock market people might wonder what happened to all of the taxes that the wealthy no longer have to pay. One of the justifications was that these billions would be invested and fund job growth.
Come on, really wealthy people know better than to put money in the stock market with a Repub in the White House. They bought T-bills, which are tax free, and they know they will be available because of the deficits caused by the tax cuts. They didn’t just get a tax cut, the government is paying them interest on it.
2 comments
The notion that a tax cut somehow puts more money into people’s pocket is stupid anyhow. More money would be useful only if there were more goods and services in the economy — i.e., if the government quit taking goods and services out of the economy and sinking them into bombs and bullets and literally shooting and blowing them up. But of course we know that government did nothing of the sort. The government is actually taking more money out of the economy and sinking it into bombs and bullets and other such unproductive shit, i.e., they’re reducing the amount of goods and services in the economy (and thus the amount of “stuff” that our dollars will buy) by literally shooting or blowing them up. So more money in the economy, fewer goods and services in the economy, guess what? That more money won’t buy you as much!
So the tax cut didn’t help the average person one bit. What it did do, however, is cause the destruction of goods and services in the economy to be funded by bonds rather than taxes.
And government bonds have the unique property that they transfer money from the tax-paying class (you and me) to the investor class (the wealthy who buy t-bills, and overseas investors like China and Japan).
Which, of course, is the point. Republicans are all about transferring wealth from the tax-paying class to their true “base”, the haves and have-mores. That’s been their modus operandi for the past 90 years, ever since they put Teddy Roosevelt out to pasture for being too aggressive at trust-busting. The taxes *will* get raised back up again — but rather than being used to provide goods and services to the economy such as roads and police protection, they will instead be transferred to the wealthy as interest on the government bonds. But by that time the Republicans will be out of office and able to blame it on the Democrats (again). The only time that hasn’t happened was when George Herbert Walker Bush broke his “read my lips” promise and raised taxes while at the same time reducing spending on bombs and bullets and shit that don’t add anything to an economy, thereby increasing the proportion of the federal budget spent on providing goods and services to the economy, but the Republican orthodoxy voted him out of office for his trouble.
– Badtux the Tax Penguin
It won’t take long for interest on the national debt to overtake everything else as the largest non-discretionary outlay in the budget and a Reagan and two Bushes are responsible for most of it.
I’m for the new tax bill that will simply send T-bills instead of 1040s to the top 1%.
The real issue is: Alan Greenspan – senile dementia or criminal conspiracy.