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That again is fundamentally wrong. As I said go read the book and learn something. Pro-tip. You completely forgot about consumption and income taxes. And that
by neilwilson 6y ago
That again is fundamentally wrong.
As I said go read the book and learn something. Pro-tip. You completely forgot about consumption and income taxes. And that there is unemployed labour capacity available - anywhere across the world.
There isn't a finite amount of stuff, there is always capacity to expand in a business, but it may take a while, and hardly anything is subject to price auctions (see PPE for details).
What happens when we hit capacity is that there is forced savings. You end up with spending capacity but nothing to buy or nothing you want to buy. In the vernacular your spending becomes ineffective. Excess savings have the same economic effect as taxation.
It's the excess savings that income schemes are trying to offset. But that just moves the problem from the financial sphere into the real sphere - why should I grow you any carrots if you're not contributing your effort to the common good?