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There is more than one way to tame inflation than jacking up interest rates so quickly. A less discussed way is to raise taxes and cut deficit government spend
by nostromo 3y ago
There is more than one way to tame inflation than jacking up interest rates so quickly.
A less discussed way is to raise taxes and cut deficit government spending.
Unlike interest rates, the effect is immediate, and can be undone quickly too.
It’s hard to do during high unemployment or during a recession, neither of which is currently the case.
- drumhead 3y agoPeople can dodge taxes, and the blame for spending cuts falls directly on the government which is politically dangerous to them. Raising interest rates is crude but very very effective, it's what crushed the high inflation of the 70s
- personomas 3y agoThe last thing we need is to raise taxes, which would further hamper our economy when we need growth in the face of rapidly growing China and the East. What we do need is to cut government spending, especially social welfare, of which first and foremost should be Social Security and Medicare.
- mrjin 3y agoJust wondering is Medicare a thing in US?
- legutierr 3y agoYes, of course, because the one thing that is driving inflation is that old people are not as poor and as sick as they should be.
- ta1243 3y agoOld people tend to be the wealthiest people, pay the least in tax, and benefit the most from services
- throwbadubadu 3y agoOh, didn't know it is that simple, but incompetents everywhere :) So that's certain? How does the tax development over the last 5 centuries look? Won't this just make the rich richer and the poor, who already struggle a lot, poorer? There are a lot of different ways to distribute tax load...
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- sangnoir 3y agoYou do know the fed is doing all it can to curtail growth, right?
- personomas 3y agoYeah, haha, that's right. That's why democracies in the 2021st century and 2020th century do. Look at EU, growth at 1% per year in Real GDP. US real GDP lower and lower over time
- arrosenberg 3y agoThey've been cutting spending for 40 years now. Unless they are going after the military budget, the spending isn't a problem (at least, the amount isn't). It's the lack of taxation and enforcement to fund it.
- junofan 3y agoWhat about the $5 trillion in COVID stimulus?
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- local_crmdgeon 3y agoIn no way shape or form is that true https://www.mercatus.org/sites/default/files/d7/Chart1-Spending-Per-Capita-vero_0.png https://www.mercatus.org/sites/default/files/d7/Chart1-Spend... https://i.pinimg.com/originals/cd/15/ad/cd15adf1636f1859543982bf7d654fdf.jpg https://i.pinimg.com/originals/cd/15/ad/cd15adf1636f18595439...
- brvsft 3y agoIt seems the trillion dollar coin idea is being spoken about more seriously than both raising taxes and cutting spending at the same time. I do wish we'd do that though. Seems like the adult thing to do, and it's the sort of compromise that would get me emotionally on board with my taxes going up. We could start the cutting with the Defense budget, but I won't hold my breath.
- comicjk 3y agoYou call passing a bill through Congress "immediate", and you think it can be "undone quickly"? I think the long-term budget deficit is too high, but the budget process is not responsive enough to be used to control inflation. (It's also too slow and clumsy when used the other way, as fiscal stimulus.) One way of using the deficit deliberately as an economic control dial would be for Congress to grant the Federal Reserve the authority to adjust payroll tax rates within a given range. I doubt this could ever happen politically, though.