06-08-2017, 05:35 PM
(06-08-2017, 11:37 AM)Belsnickel Wrote: I am more of a Keynes guy, and increasing taxes and spending less in good times and decreasing taxes and spending more in bad times is the way to go. This is simplified, but that's the gist of it, so makes sense to me.
That would be outstanding if true Keynesian economics is what the Fed and states practiced. But in reality, they only implement the half that is either spend more or tax less (and, increasingly, BOTH)...in all situations. This pattern, along with issues arising from too much debt, is probably what is leading to diminishing returns from stimulus spending.
Stable [fixed] tax rates may not always be optimal in different economic environments, but might still be superior for businesses (even individuals) with respect to planning and investment.
I'll go even simpler on Keynesian economics - surpluses and deficits are simply a result of the economic cycles where taxes are largely fixed and spending is steady at the rate of inflation growth. The more aggressive version allows for stimulus spending but DOES NOT allow for long-term increases in debts/deficits (meaning you pay it back).
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