How Rich People Are Like Mattresses!
How Rich People Are Like Mattresses!!!
This is a Internet Article about the Economy. Right now, there is a debate about whether tax cuts for rich people are good or bad, and whether they help the economy. I could be TOTALLY STUPID like the Free Market Extremists, and just say “Well, any money the government DOESN’T get, is good!” But lucky for me and everybody else, I have not read the FICTIONAL novel about trains by the dead Russian atheist, named Ann Rand. Sooo, you get to read some REAL Economy Stuff not just BLAH BLAH BLAH theory stuff that has never worked.
First, we have to talk about PARADOXES! A PARADOX is a “a statement or proposition that seems self-contradictory or absurd but in reality expresses a possible truth.” (This is from Dictionary.com on the Internet.)
There is a very famous Economy Paradox called the “Paradox of Thrift.” Which says that if a few people save a lot of their money, that is probably good for them, and doesn’t hurt anything. Just say instead of spending money, they stick it in a mattress. It is out of circulation. BUT, if everybody gets real thrifty and starts like buying stuff at Goodwill and not eating out at McDonalds, and sticking their money in a mattress, then the whole economy goes to pot because DEMAND has dried up.
What might be good for a few people to do, which is advice to be thrifty, doesn’t work when everybody does it. Because then, the thrifty person may lose their job at McDonalds because everybody else is being thrifty, too. That is why it is called a PARADOX.
Now another thing here which is important is that you notice how DEMAND is what makes things work in the Economy. Take away DEMAND and everything is just POOF! Just for what it is worth, a lot of Republicans are SUPPLY SIDE people which means that if you build it, somebody will buy it. Well, just look at the Economy now, and you can see that people aren’t buying stuff and it’s not because it isn’t there. It’s because they don’t have any money. This is why SUPPLY SIDE stuff is really stupid, and is also called VOODOO Economics.
Which now brings you to the DEMAND stuff. There are two things that sound hard in Economy issues, but really aren’t. They are called Marginal Propensity to Save (MPS) and Marginal Propensity to Consume. (MPC) What these are is what people will do with the very next dollar they get. Poorer people spend it on stuff like food and shelter. Rich people tend to save it or invest it because they already have 10 cars, and 4 houses, and a couple of boats. They just can’t hardly spend all that they have.
This is why a lot of people say that tax cuts for middle classes do good in the Economy, while the tax cuts for the rich don’t. The tax cuts and unemployment for poorer and middle class people goes straight into DEMAND. Where tax cuts for the rich get “invested.”
If the money was getting INVESTED in America, or put on deposit at a American bank, then it might not hurt quite so bad. Because if there is a lot of it, interest rates go down because everybody is trying real hard not to lose the value of their money in inflation. BUT, now rich people can invest in places like China, Mexico, India, Brazil, and wherever else in the world. Sooo, all the excess money that rich people get is just going overseas and is just the same as if it was put into a mattress to us Americans. It is out of circulation here. And everybody is suffering because of it.
The Free Market Extremists told us that “free trade” was just soooo good for everybody, and they were just lying through their teeth. It was good for the few rich people who could invest overseas, but not good for the rest of us. This is part of how the rich are just getting richer and the middle class and poorer people getting worse off or not growing much for like 30 years. This is how, and why jobs have ended up overseas.
Taxes are not happy things, but at least most of the money stays here. It might get wasted, but at least it is getting spent and wasted in America. Now some people worry about the country going broke. Well, that is just STUPID, too!!! We are not like Greece, for example. That is because our debt is in money that we can print. If we owe China a trillion dollars and we don’t have it, we can just print it out and give it to them and they can not complain because it is what they said they would accept –American dollars.
What the real worry is, is INFLATION. Once again, this is more of a rich people problem, because it is the rich who worry about the 100 million dollars they have only buying 50 million dollars worth of stuff. People who work, get paid in the inflated dollars, and when prices go up, they will stay about in the same place. Plus, debts will be easier to pay because there is more dollars floating around. For example, back in the olden days of 1980, a $400 house note seemed real high. But in 2010, it is like nothing. You can’t hardly rent a tent for that little.
But, even inflation is not a horrible problem yet compared to the lack of demand. This is where the tax cuts to the rich are really bad news. Not because of the deficit, because we can print money to get out of that. It is because of more dollars getting put into the “overseas” mattress. The tax cuts to the rich will just make that problem worse, and that is the really bad part. Not the deficit.
If you want to understand economy stuff like this, it is not that hard. I have learned a lot of this stuff just over the last few months!!! First, you have to STOP getting your Economy lesson from the Ann Rand FICTIONAL novel. That stuff has NEVER WORKED ANYWHERE ANYTIME!!! And, if you are a grunty little malebeast who likes to pretend to have the answers to everything, you are going to have to do something besides spout off “If the government wasn’t involved, then. . .”
Because, that ISN’T THE ANSWER to every economic problem. Lower taxes are not the answer to every economic problem. You are just going to have to swallow your pride and start reading some new stuff and try to understand better what is going on. Your little thingy between your legs ISN’T GOING TO FALL OFF if you take the time to learn about Economy things instead of just spouting off the same old stupid stuff all the time. Plus, stop worshipping the rich!
Get a copy of “Econned” by Yves Smith and READ IT!!! Go to naked capitalism.com and READ THERE EVERYDAY. Go to marketticker.org by Karl Denninger and READ THERE EVERYDAY. That way, you can start to be a real Economy expert, too!!!