Basic Keynes prior to game theory. The problem is that if people are worried about not having enough money, they’re going to hoard a one-time windfall payment, not spend it.[/quote]
You think most Americans are not going to spend money the second they get it?
Right now people are saying they are worried about the economy, and other people, but generally they are ok. The old, “I heard it on the news, so it must be true even though I don’t see it anywhere.” (I am speaking so eloquently right now.)
Regardless I disagree with the idea that saving, or paying off debt will not benefit the economy as much as spending it, which they are trying to get America to do.
Paying off a debt is still transferring money similar to buying something, with the added benefit of potentially freeing up some of the person’s income that can be a perpetual increased spending.
[quote]The Mage wrote:
Regardless I disagree with the idea that saving, or paying off debt will not benefit the economy as much as spending it, which they are trying to get America to do.
Paying off a debt is still transferring money similar to buying something, with the added benefit of potentially freeing up some of the person’s income that can be a perpetual increased spending.[/quote]
I’d have to disagree. By paying off debt you are eliminating taxable income the lender would have made off you. And so long as the interest you would have paid is not tax deductible, that is a net decrease in taxable income in the economy.
If you decided to spend it you would still be paying the interest on your debt and by spending it you would increase the merchant’s taxable income as well (and increase the income of the Asian company that made whatever you bought).
So congratulations, you are now personally responsible for reducing the taxes paid to the US treasury and you’ve just aided in increasing the USA’s fiscal deficit as well as screwing over some poor Asian family that relies on that $1.50/day! I hope you’re happy!
On an individual level, I agree with you. People should primarily either reduce debt and/or invest it depending on your own situation and risk tolerance.
[quote]BostonBarrister wrote:
Sure it helps you if you actually get one… damn it…[/quote]
You are the victim of this thievery. Money was stolen from you and given to someone who received stolen goods — your tax dollars. The rebate is simple robbery taking from the more successful and given to swarming mobs who head for the nearest Wal-Mart, with your money in hand.
[quote]The Mage wrote:
btm62 wrote:
Thanks and not debt free. Getting married. (Also known as paying for sex the legal way, oh wait that’s dating. Marriage is paying and no sex.)
Holy Hell!
Doin the Dave Ramsey thang for the debt right now.
Ah, a cult member.
I’ll (hopefully) be down to just a student loan by the end of this year.
49 debts paid off. Yes 49. (And it is actually more then that, but that was when I started keeping track.) Most of these were medical bills. (Gee, after all these tests, we still don’t know what’s wrong with you… Here’s your bill.)
[/quote]
I paid off 600.000 Euro in debt. This is roughly 1.000.000 USD.
You are the victim of this thievery. Money was stolen from you and given to someone who received stolen goods — your tax dollars. The rebate is simple robbery taking from the more successful and given to swarming mobs who head for the nearest Wal-Mart, with your money in hand.
FWIW: My wife and I were robbed as well.
[/quote]
My understanding is that this is actually a tax cut for the 2008 tax year, but they are sending out the money before people pay it back.
Not sure how it is affecting people who are not paying any tax though. If anyone is actually getting money they are not paying in, you are correct.
* Distinguishes between permanent income, which individuals expect to be long lasting, and transitory income, expected to disappear shortly.
* Y = YP + YT
* Individuals usually consume all of their permanent income in the year received but spread out transitory income over their lifespan
You are the victim of this thievery. Money was stolen from you and given to someone who received stolen goods — your tax dollars. The rebate is simple robbery taking from the more successful and given to swarming mobs who head for the nearest Wal-Mart, with your money in hand.
FWIW: My wife and I were robbed as well.
My understanding is that this is actually a tax cut for the 2008 tax year, but they are sending out the money before people pay it back.
Not sure how it is affecting people who are not paying any tax though. If anyone is actually getting money they are not paying in, you are correct.[/quote]
The bottom 50% of income earners pay about 3% of all the income tax collected. Besides debasing the currency, the top 10% are giving a ‘gift’ to the others, the lower 50% being the primary beneficiaries — they pay little or nothing and get a check.
[quote]The Mage wrote:
As far as the “stimulus” check, I have heard one financial “expert”, who seems to know his stuff, support the stimulus as basic Keynesian economics.
[/quote]
Those silly Keynesians! When will they ever learn…?
“The assumption of the politicians and Keynesian economists is that what is needed is consumer spending. But why shouldn’t taxpayers put their money into savings? Why not fund the private sector? The hostility of Keynesians to thrift is legendary. They believe that consumption stimulates the economy. They ignore what economists had argued for two centuries before Keynes (except for Mandeville, a dentist): (1) consumption comes from prior production; (2) production comes from an increased supply of capital; (3) so, an increase in the supply of capital leads to increased consumption.”
Ok, should say I am not saying I am supporting keynesian economics, just was pointing it out.
Looking up the information, it looks like they are rebating based on 2007 tax liability. But it does have a $300 per person minimum. So anyone getting the difference between what they were supposed to pay and the $300 (or more depending on family,) are getting welfare. Anyone @ $300 and over are simply getting a tax cut.
And again I am more for a tax cut to stimulate the economy, and firmly believe in the trickle down theory. (Which keeps proving itself.)
As far as the Permanent Income Hypothesis, I would agree that of course people are not going to change their regular habits, but they will treat this money differently simply because they will see it as a gift.
Just like a person is less likely to throw away tickets to a show they paid for then if they received them as a gift, or won them. In both instances the item is worth exactly the same, but are treated differently.
There is an emotional attachment to money you have earned, and less for money given to you. Which is one of the reasons why welfare has been such a failure, public housing is much less likely to be taken care of and more likely to be trashed.
The funny thing is that there would be no need for this stimulus package if people actually saved money in this country. Taxing people and then giving it back to them is essentially forcing people to save for what is today, a rainy day.
[quote]beebuddy wrote:
The funny thing is that there would be no need for this stimulus package if people actually saved money in this country. Taxing people and then giving it back to them is essentially forcing people to save for what is today, a rainy day.
[quote]The Mage wrote:
There is an emotional attachment to money you have earned, and less for money given to you. Which is one of the reasons why welfare has been such a failure, public housing is much less likely to be taken care of and more likely to be trashed.[/quote]
This is a very good point that is never brought up in debate. People need to look at this money as their own that was taken from them to begin with.
I want to write a letter to one of my state representatives to propose a bill that would outlaw all W4 payroll income tax withholdings so that at the end of the tax year everyone would have to pay and not receive a refund – for both state and federal income taxes. The intention is that people would start caring more if they actually had to save their own money to write a check to the government every year.
BTW, I wasn’t suggesting that you necessarily agreed with the Keynesians; just taking the opportunity to show that their theories are backward.
A straight tax cut and lowered spending by our government would do wonders for capital production. This rebate, unfortunately, is just money out of thin air. It is not going to be diverted from other funds and will just go into the national deficit which we will pay taxes to for the interest.
[quote]Headhunter wrote:
The Mage wrote:
Headhunter wrote:
You are the victim of this thievery. Money was stolen from you and given to someone who received stolen goods — your tax dollars. The rebate is simple robbery taking from the more successful and given to swarming mobs who head for the nearest Wal-Mart, with your money in hand.
FWIW: My wife and I were robbed as well.
My understanding is that this is actually a tax cut for the 2008 tax year, but they are sending out the money before people pay it back.
Not sure how it is affecting people who are not paying any tax though. If anyone is actually getting money they are not paying in, you are correct.
The bottom 50% of income earners pay about 3% of all the income tax collected. Besides debasing the currency, the top 10% are giving a ‘gift’ to the others, the lower 50% being the primary beneficiaries — they pay little or nothing and get a check.
[/quote]
The ‘rebate’ is scaled based on tax bracket, isn’t it?
Anyways, I’m saving the money. I’m hoarding it and negatively affecting the economy. AhahahahaaA!!! (maniacal laughter)
